As SERV looks back on its first 10 years, one of the most striking accomplishments is the surge in deals that have been closed, which could not be covered under its predecessor ERG. When it comes to risk, there have been shifts from some markets to others, but overall the risk remains the same on a global level.
SERV was first founded in 2007 with the purpose of insuring exports that its predecessor ERG as well as private insurers would not cover or only offered partial coverage for. SERV, which is owned by the Swiss confederation, is self-financed and has increased its capital by CHF 600 million to CHF 2.6 billion in 10 years.
“Our predecessor did not cover private corporate credit risk and this fundamental revision has led to a commitment of CHF five billion in this very important area. Our total commitment is CHF seven billion, so this sector accounts for a very large share of transactions. It clearly shows how important SERV insurance is for Swiss industry,” says Herbert Wight, director of SERV.
Over the years, SERV has seen financial and political risks come and go in the world markets. Ten years ago, China was considered a much higher risk market than it is today. Iran was at the beginning an important export destination, then it became a non-market, whereas today, with sanctions lifted, it is slowly opening up to international trade, but the country is still in the OECD country category 6 (high risk). “We are seeing a slow development in the right direction,” says Wight. Sub-Sahara is rapidly growing in importance for Swiss industry. On the other hand, trade with for example Russia and Turkey has become more challenging, although these countries remain important markets for Swiss enterprises.
“Risks change over time, but the sum of them tend to stay constant. SERV is prepared to be a partner in facilitating transactions in many of these high-risk markets. For many companies, especially SMEs, this is crucial or there would be no deal,” says Wight.
A challenge for Swiss industry is the strong Swiss franc, which shows no sign of weakening. Moving production abroad is a way of lessening its effects and a recent revision of SERV rules has opened up a clearer policy regarding Swiss content of exported goods. “One no longer needs to have complete Swiss content, even if the goal still is to have the highest added value in Switzerland,” says Wight.
“This is a pragmatic approach. Flexibility is key to ensure the continued success of Swiss exports and we are happy to provide means to that end,” adds Wright.