Recoveries and indemnifications for the year were of similar to the previous year. Once again, indemnifications were extremely few, while recoveries were at a higher than expected level.

EKN carries on extensive loss prevention measures in both business areas. For 2007 these activities were dominated by transactions which had already required loss prevention measures in the previous year. The largest transaction concerned the leasing of aircraft, where the purpose of the guarantees was to ensure a certain residual value for the owners in the event that the lease contracts are terminated early. In the guarantee, EKN also has recourse agreements with the investors, in which a specified level of lease payments is guaranteed. Because of the crisis in the American aircraft industry, the lease contracts have been renegotiated at much lower rental levels than initially. To cover the rental deficits thus arising on the guaranteed lease contracts, EKN paid out compensation of SEK 20 million during 2007.

Almost no new indemnifications

As an insured credit falls due, EKN pays out an indemnification. Of the 11 transactions that led to indemnifications, only five were new transactions during the year. Other relates to transactions where indemnifications were paid in previous years. The year’s indemnifications fell to an extremely low level, amounting to only SEK 12 million. The growing number of guarantees to small and medium-sized exporters becomes apparent by the fact that losses in this category accounted for seven of the 11 transactions. All the indemnifications relate to different countries with a wide geographic spread. That Sweden is reported as one of these countries is because the indemnification was paid under a counter guarantee.

Recoveries

Recoveries again exceeded our expectations, at a total of SEK 925 million. The largest single recovery was the pre payment of Peru’s Paris Club Agreement. In addition, Angola settled its outstanding capital debt during the year. The other 11 countries who are paying off their debts to EKN in line with agreed contracts are also contributing to the healthy income from recoveries. Large recoveries from a particular country are also expected in 2008, but EKN’s estimate of the nominal claimed amounts, reflecting expected future recoveries, fell back somewhat to 20% of the nominal amount, and amounted to SEK 1.4 billion.

New contracts

Sweden signed a new bilateral contract with Cameroon during the year. The country has consequently been granted further debt relief. The entire remaining outstanding claim, amounting to some SEK 500 million, was written off.

A contract about the sale of a claim was signed during the year for EKN’s largest single commercial claim ever. The claim relates to an Indonesian company producing paper and pulp. As the contract means that the purchaser will pay for the purchase in several instalments, the recoveries for this claim will continue during 2008. The recoveries of commercial claims were entirely dominated by this transaction. Other commercial recoveries have mostly been made under repayment contracts with a number of private debtors.

Compensation for debt relief

The Government decided during 2006 that EKN should receive compensation for debt relief granted under the aegis of the Paris Club, in accordance with an established allocation model. During 2007, SEK 36 million was taken up as income, as compensation for the debt relief granted during 2006 to Cameroon, Congo Kinshasa and Ghana. The compensation covers a small part of the claims written off.

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