ECIC IR 2023

Integrated Report 2023

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

E X P O R T C R E

L T D

O C

A S

C

R I

D I

F

T

A

I

N

H

S

T

U

U

R

O

A

S

N

F

C

O

E

N

C

O

O

I

R

T

P

A

O

R

Investment risk The Corporation ensures that its investment risk appetite is comparatively lower than its underwriting risk appetite to attain reasonable returns and strengthen its capability to meet claim obligations without eroding its capital base. This approach determines the asset classes that are included in the investment portfolio. Increasing requirements and expectations around environmental and social (ESG) impact management by fund managers is important. In this regard, periodic manager due diligence includes a view on governance and risk management.

Operational risk The Corporation uses both leading and lagging key risk indicators (KRIs) to manage operational risks proactively. In post-pandemic era, emerging operational risks need to be identified and managed accordingly. As the Corporation embraces hybrid working conditions it is important to make sure that risk levels that could be exacerbated by reduced physical interaction are kept to within acceptable levels. Increasingly, the Corporation explores innovative ways to ensure full engagement of staff is achieved under the hybrid work arrangement, whilst emerging risks are managed to within set limits.

Risk Appetite The Board together with management have crafted the Corporation’s risk appetite as stipulated in the Risk Management Strategy, as per below excerpt:

Breach (Y/N)

Core Principle

Risk Appetite Statement

Measure

Self-Sustaining on a standalone basis

The Corporation shall grow the business by maintaining a capital buffer above SCR and EC. The Maximum Insurance Capacity that can be sustained by the available capital. The maximum combined loss (gross of claim salvages) of a single event from exposures in a single country. The maximum combined loss (gross of claim salvages) of a single event from exposures in an industry. The maximum loss (gross of claim salvages) of a single obligor/project. The Corporation will manage or avoid situations / actions that could have a negative effect on its reputation and brand To ensure liquidity risk is kept low, the Corporation shall ensure that its insurance liquidity ratio (ILR) does not fall below set limit

The SCR and EC cover ratios shall not fall below 115% and 110% respectively The Maximum Insurance Capacity is 10 times multiple of Equity. This Limit is subject to both EC and SCR cover ratio limits. $696 million loss ($313 million loss net of salvages) 1

N

Maximum underwriting capacity

N

N

Country concentration risk

Industry concentration risk

$696 million loss ($313million loss net of salvages)

N

N

Obligor concentration risk

$313 million loss (at a 100% LGD) 2

Protect Reputation and Brand

N/A

N

Liquidity risk

ILR>100%

N

1 The claim salvages are assumed to be 55% i.e., 45% LGD as per the highest expected for securitized investment insurance transactions. 2 Should an exposure be underwritten above this limit, a lower LGD must be justified.

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