Annual Report FY2005

Nippon Export and Investment Insurance
Chiyoda First Building, East Wing 3rd Floor, 3-8-1, Nishi-Kanda,
Chiyoda-Ku, Tokyo 101-8539, Japan
Tel: 81-(0)3-3512-7650 Fax: 81-(0)3-3512-7660

http://www.nexi.go.jp

Inquiries:
Public Relations Group,
Planning and Administration Department
Tel: 81-(0)3-3512-7655 Fax: 81-(0)3-3512-7660
E-mail: info@nexi.go.jp

Printed in Japan on recycled paper.

(Apr. 2005 – Mar. 2006)

Ⅰ NEXI Mission
NEXI is committed to:
1. Providing insurance products that will make customers feel secure
and protected in overseas transactions
2. Providing advice to customers from the preliminary stage of planningtransactions
3. Responding promptly to the inquiries and interests of customers
4. Meeting the demands and business needs of customers
5. Promptly completing the assessment of insurance claims and making
insurance claim payment
6. Speedily allocating the recovery

Management Principle

Nippon Export and Investment Insurance (NEXI) is committed tocontributing to the economy and society of Japan through efficient andeffective insurance business operations. It does this by responding
precisely to customers’ needs with a rapid perception of market changes
and by underwriting the risks inherent in international transactions thatcannot be adequately protected by conventional commercial insurance.

Management Policy

1. NEXI, as an independent administrative institution servicing the publicthrough its operations, aims to contribute to the stability of people’s
lives and to the sound growth of the economy.
2. NEXI will always give first priority to the interests of its customers,
respond promptly and precisely to customers’ individual needs,
provide customer services of superior quality, and achieve the highest
level of operating efficiency and effectiveness.

NEXI’s Resolution

SPEED

PROFESSIONALINTEGRATIONREFORM

IT ORIENTED

TRANSPARENCY

3. NEXI fully utilizes the talents of its entire management and humanresources to accommodate anticipated changes in the market. Its
objectives are to undertake more risk, develop new products and tobe creative in applying flexible risk underwriting schemes. The
company further aims to increase profitability through prudent risk
control and by applying suitable criteria, to ensure long-term growthand prosperity.
4. NEXI encourages and fosters the development of knowledge and theskills of its employees through training and makes the best use of thestaff’s diverse professional backgrounds to create an ideal workplacethat corresponds to current changes in society.

C

O

N

T

E

N

T

S

NEXI Mission

1

Message from the Chairman

3

Main Data for Fiscal Year 2005

7

Main Projects Recently Underwritten

11

Review of Performance in Fiscal Year 2005

19

Financial Results for Fiscal Year 2005

25

Second Medium-Term Objectives

31

Profile of NEXI

33

NEXI Customer Service Charter

35

Implementation of Confirming Environmental
39
and Social Considerations

Ⅱ Message from the Chairman

Ⅱ Message from the Chairman
Since its establishment in 2001, Nippon Export and Investment
Insurance (NEXI) has emphasized the “customer first” principle
and has strived to improve services and enhance the efficiencyof business operations. In these days of rapidly expanding
economic globalization, we see increasingly diverse needs for
trade and investment insurance as a means of managing risks.
We at NEXI are determined to respond flexibly and creatively tothese changes in the business environment.

Hidehiro Konno
Chairman and CEO

The major change in the regulatory environment is thederegulation of trade and investment insurance business forprivate insurers. In response to the government’s call, NEXI
decided to revise the traditional comprehensive insurance
contracts with the exporters’ associations in order to ensure
customers’ freedom of choice between NEXI’s products andthose of private insurers. We are committed to implementing
the reformed scheme in March 2007, together with a newpremium system which more appropriately reflects risks, andfurther simplification of paperwork and procedures.
In order to fulfill our role as a public institution, NEXI’s Second
Medium-Term Objective illustrates our goal of reinforcing ourefforts in various areas, including active involvement in projects
related to natural resources and energy, support for small andmedium-sized enterprises, and contributions to Japan’s
Economic Partnership Agreements.
In the medium- and long-term insurance area, we have seen an
increase in the number of transactions based on pure corporate
or project risks, without any payment guarantee (L/G) being
issued by governments or major banks. We are meeting thischallenge by improving our assessment and recovery
capabilities.
In addition, we will further expand cooperation with overseas
export credit insurance agencies (ECAs), by signing “one-stopshop” reinsurance agreements with European and American
ECAs in order to respond to international consortia in a timely
manner. We are also concluding reinsurance agreements with
Asian countries in order to support the efforts of Japanese firmsthat are expanding their operations throughout Asia.
NEXI has developed a broad range of innovative approaches
responding to real business needs, resulting in a total
underwritten amount for fiscal 2005 of 12.8 trillion yen (anincrease of 11.1% over the previous year). We look forward to
deepening our relationships with our customers, and pledge todeliver trade and investment insurance services that are truly
useful. We are deeply grateful for your continued support andcooperation.

3

Annual Report FY2005

Meeting Customers’ Demands and Raising
the Quality of Services Still Higher in FY2005
New policy/premium rate structure to
be implemented starting in April 2007
NEXI will implement a new policy and premium rate
structure starting in April 2007. This completely new
structure was formulated to allow NEXI to more
effectively respond to recent market changes andprovide better, more efficient insurance services tocustomers.
The aims of this restructuring are to: (1) greatly
improve our insurance policies, including expandedrisk coverage; (2) better match premium rates withrisk levels; and (3) further simplify procedures. With
regard to policies, an exporting company will be free
to decide whether or not to use NEXI comprehensive
insurance, even when it belongs to an exporters’
association which has a comprehensive insurance
contract with NEXI. In addition, through the expansionof risk coverage and enhancement of the optional
policy menu, we will be able to better respond to thediversified insurance needs of our customers.
In terms of premium rates, we have comprehensively
reviewed our premium rate table and strengthened thecorrelations between risk factors, such as
creditworthiness of buyers and insurance period, andpremium rate levels. As a result, premiums for low-risk
transactions will be lowered, while those for high-risk
transactions will be raised.
With respect to procedures, our efforts include thefacilitation of insurance applications using the Internet.
While the new policies and premium rate structure willtake effect in April 2007, in order to give ourcustomers sufficient time to understand the new
structure, we published detailed information on our
website (http://www.nexi.go.jp) at the end of March
2006.

Strengthening our approach to thedevelopment of natural resourcesin other countries
In response to the rapid increase in the demand forenergy, notably in India and China, international
competition for natural resources is becoming
increasingly fierce. In this context, NEXI is putting thehighest emphasis on transactions involving thedevelopment of foreign energy and mineral resources
by Japanese companies. NEXI has consequently
been working vigorously to support such projects,
including those involving countries rich in natural
resources, such as Brazil and Middle Easterncountries.
In FY 2005, in particular, in order to cope with the tightglobal market for uranium, for which Japan depends
entirely on foreign imports, and taking into account theimportance of nuclear power generation in Japan, forthe first time NEXI provided Overseas Untied Loan
Insurance to Kazakhstan for a uranium development
project. In this way NEXI contributed to stability in the
supply of energy resources essential to Japan. (Seep. 14 of “Main Projects Recently Underwritten.”)
Furthermore, in connection with “Measures for Africa,”
which was a major topic at the 2005 G8 Summit, in
July of that year NEXI eased coverage terms for fiveresource-producing countries in Africa previously on
the “excluded from coverage” list, providing support
for the development of LNG by Japanese companies
in Equatorial Guinea and reinforcing NEXI’s record ofachievement.

Sales of newly established Export
Credit Insurance for SMEs increasing
In April 2005 NEXI introduced a new insurance
product specifically designed to support the efforts ofsmall- and medium-sized enterprises (SMEs) to
expand into overseas markets. Since we began
underwriting this insurance, a large number of SMEs
have been covered by this insurance (168transactions underwritten in FY 2005). The mainfeatures of Export Credit Insurance for SMEs are:Coverage of 95% of damages incurred from theinability to collect receivables in transactions of
direct exports from Japan with a maximum
repayment term of 180 days.
Availability of this insurance in alliance with banks,
in order to promote bank loans to SMEs engaged in
the export trade, enabling customers to apply forthis insurance at participating banks.
Simplified procedures and expedited services that4

Ⅱ Message from the Chairman
Annual Report FY2005

provide greater convenience for our customers,
including simplified procedures for establishing theright of pledge for insurance claim rights.

Expansion of policyholders
eligible for coverage
Expanded range of policyholders eligible
for Trade Insurance for Manufacturers
In the past, eligibility for Trade Insurance for
Manufacturers was limited to policyholders who were
manufacturers. However, in order to meet the needsof manufacturers who spin off their sales departments,
NEXI has expanded eligibility criteria to include
manufacturer-linked trading companies, when the
manufacturer contributes at least two-thirds of its
capital and when for all practical purposes these firms
can be regarded as manufacturers’ sales
departments.
Shortening of Minimum Policy Period forOverseas Untied Loan Insurance/Overseas
Investment Insurance
In the past, a minimum policy period of three years
was required to apply for Overseas Untied Loan
Insurance or Overseas Investment Insurance.
However, taking recent business needs into account,
we have revised regulations to make it possible toapply for these types of insurance for a minimum
policy period of two years.

Initiation of commercial risk coveragefor loans extended to overseas
Japanese affiliates
NEXI has started providing coverage of commercial
risks for bank and similar loans extended to Japanesesubsidiaries under Overseas Untied Loan Insurance
from October 2005, subject to certain conditions. In
the past, only political risks were covered for suchloans.

Elimination of certain surcharges forforeign exchange risk coverageStarting in October 2005, foreign exchange risk
coverage for US-dollar denominated loans withrepayment terms of at least two years became
available at no extra cost. This change was made inconsideration of the operations of Western ECAs, and5in order to lighten the premium payment burden on
customers. Generally, NEXI provides up to twice theamount initially insured under supplemental
agreements after payment of a 27% premium
surcharge (in the case of a lump-sum advancepayment).

Expanded insurance coverage forloans to non-L/G projects
Recently, due in part to the impact of IMF guidance on
restoring fiscal soundness, transactions targeting
infrastructure improvement, such as electric powerbusiness, which in the past used to be guaranteed byhost country governments, are now being
implemented as non-L/G projects that make use ofprivate sector resources. In line with this trend, NEXI
has also strengthened and expanded the assessmentof commercial risks of loans extended to non-L/G
projects. As a result, the number of non-L/G
commercial risk transactions underwritten in FY 2005
was 23 (in FY 2004 it was 16).

NEXI is working to strengthen the Asian reinsurance
agreement network with Asian ECAs. NEXI believes
that the program will support the business activities ofJapanese affiliates in Asian countries and contributeto strengthening the economic relationship between
Japan and other Asian countries. This is the second
reinsurance agreement concluded with an Asian ECA;
the first was a reinsurance agreement concluded withECICS of Singapore in 2004.
NEXI’s reinsurance is expected to increase Asian
ECAs’ underwriting capacity. As a result, it will
become easier for Japanese affiliates in Asian
countries to manage the risks involved in exporttransactions. NEXI will continue to expand its
reinsurance network in order to support theinternational business activities of Japanesecompanies.
Diagram of the NEXI Asian Reinsurance Network
Trade Insurance
Japanese Affiliate

ExportBusiness operations of Japaneseaffiliates supported by applying
the Asian Bond Scheme
In order to promote the development of the local
currency-denominated bond market, NEXI supports
the stable business operations of Japanese affiliates
by providing Overseas Untied Loan Insurance(insurance for guarantee of obligation) for local
currency-denominated bonds issued by thesecompanies. There were two underwritten transactions
in FY2005 (including one preliminary approved
transaction), bringing the total number of underwrittentransactions since the launch of this scheme in 2004
to three.

Expansion of Asian Reinsurance
Network
NEXI concluded a reinsurance agreement with the
Export-Import Bank of Malaysia, Berhad (MEXIM), an
export credit agency (ECA), in June 2006. The
conclusion of this agreement enables NEXI to provide
reinsurance to MEXIM when MEXIM underwrites
insurance for Japanese affiliates in Malaysia thatexport goods to a third country.

Third Country
Buyer

ExportOverseas ECA
Reinsurance

Third Country
Buyer

Providing Reinsurance to Overseas
Export Credit Agencies for
Implementation of the“One-Stop-Shop” Scheme
NEXI has concluded “one-stop-shop” reinsurance
agreements with overseas official export credit
agencies (ECAs) in order to promptly and accurately
meet the business needs that have become
increasingly international and borderless during thelast few years. In FY2005 we concluded newreinsurance agreements with EFIC (Australia) and
CESCE (Spain).
Through “one-stop-shop” reinsurance, NEXI canprovide reinsurance to overseas ECAs. This meansthat there is a single location for insurance
applications, enabling the flexible formation offinances and a reduction in the total cost oftransactions for customers. The purpose of thisscheme is to support international joint ventures inwhich Japanese companies participate.

In FY2005, in order to support international expansionof the Japanese aircraft industry NEXI provided
reinsurance to the US Ex-Im Bank for the exporttransaction of Boeing 767 aircraft to Ethiopian Airlines.

Spirit of the NEXI Customer Service
Charter Reflected in Services
Based on the spirit of the Customer Service Charter,
we have simplified various procedures, and efforts
have been made to lighten our customers’ burden inorder to expedite services.
For example, starting in October 2005, a change wasintroduced in the method of calculating premiums ofOverseas Untied Loan Insurance, for the greater
convenience of the insured. This change altered theexisting complicated calculation method of using thedaily average insured amount to a simpler one thatused the basic terms of the transaction, and thepremium can now be calculated with a lesser burden
on the customers.
Other procedures have also been simplified, as
follows:
The OCR form used for Enterprise Comprehensive
Insurance has been revised.
The method of calculating the premium rate ofBuyer’s Credit Insurance has been modified.
The wording used in the insurance policy of
Prepayment Import Insurance has been amended
to make it more user-friendly.
The insurance policy of Overseas Untied Loan
Insurance (guarantee of obligation) has beenrevised.
The claims assessment process has been partiallysimplified.
The codes for cause of insured risks used after
occurrence of risks/losses have been reviewed.

Expansion of debt collection network
for reduction of customer’s burden
NEXI used to engage one servicer (collection agency)
in its debt recovery service. However, we have newly
engaged seven other servicers, including a law firm,
making NEXI’s servicer network an eight-servicer
structure, which has improved and expanded ourrecovery capability globally. As a result, we are able tooffer a more effective debt recovery service in wideranging areas and further reduce the customer’sburden in debt recovery operations.

6

Ⅲ Main Data for Fiscal Year 2005

Ⅲ Main Data for Fiscal Year 2005

Annual Report FY2005

2.

Underwritten AmountThe total FY 2005 underwritten amount was ¥12.8 trillion, up 11.1% from the previous year.
Underwritten Amount1.

(Fiscal Year)

Result of Trade and Investment Insurance Activities (from FY1987 to FY2005)(Billions of yen)

300
3000

Underwritten Amount by Region

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Africa 2.9%
South America
2.9%

2001

10.1

2002

10.6

2003

11.1

2004

11.6

2005

North and Central
America
26.3%

3

6

9

12

15 (Trillions of yen)

Europe
16.3%

200
2000

3.

Asia
47.9%

12.8
0

100
1000

Oceania 3.7%

Outstanding Commitment

Total outstanding commitment in FY 2005 was ¥10.7 trillion, up 14.6% compared with the previous year.
Outstanding Commitment

Outstanding Commitment by Region(Fiscal Year)00

Africa 2.2%
South America
6.7%

2001

7.5

2002

7.9

North and Central
America
15.1%

-100

8.6

2003
2004
-200

9.3

2005
2

4

Asia
64.7%

Europe
9.9%

10.7
0

Oceania 1.4%

6

8

10

12

(Trillions of yen)

-300

4.

Premium Income

Premium Income in FY 2005 was ¥40.1 billion, down 2.7% from the previous year.
-400(Fiscal Year)(Billions of yen)

Fiscal Year
Premium income (A)Recoveries andother income (B)Claims paid (C)Single year
balance (A+B-C)

1987 1988 1989 1990 1991 1992 1993 1994
30.4 21.3 34.2 44.8 35.7 44.7 46.2 44.1
34.9 40.0 69.3 38.7 40.7 111.2 77.3 85.2
109.5 164.8 142.7 198.6 341.9 148.2 128.0 80.6
(44.2) (103.5) (39.2) (115.1) (265.5) 7.7 (4.5) 48.7

1995 1996 1997 1998 1999 2000
43.5 41.0 46.0 45.4 33.2 32.9
98.3 121.2 123.0 91.3 84.6 85.3
57.1 44.4 30.2 16.7 21.6 32.4
84.7 117.8 138.8 120.0 96.2 85.8

2001
37.3
74.5
49.9
61.9

2002 2003 2004 2005
31.3 43.2 38.0 43.8
70.2 97.7 101.4 228.7
65.1 23.0 12.9 3.7
36.4 117.9 126.5 268.8

On an actual payment basis. Premium income does not include refunded premiums.

37.4

2001
29.1

2002

44.8

2003
2004

41.2

2005

40. 1
0

7

10

20

30

40

50

(Billions of yen)8

Ⅲ Main Data for Fiscal Year 2005
Annual Report FY2005

5.

Claims Paid

The total amount of claims paid in FY 2005 decreased by 71.5% from the previous year to ¥3.7 billion.
Claims Paid by Risk (Political/Commercial)
Political

Claims Paid by Region
Africa 3.0%

Commercial

Claims Paid by Region (Political)
Africa5.9%

Oceania 0%(Fiscal Year)

2001

20.3

2002

29.6

10.8

28.8

12.2

65.1

11.2

Asia
54.0%

Europe0.4%

12.9

Asia 82.4%
Europe0.1%
North and Central
America 2.1%

3.7
0

10

Europe
0.8%

Asia
67.6%

1.9
1.8

2005

South America
38.1%

North and Central
America 8.7%

23.0

Africa0%
Oceania 0%

North and Central
America 15.8%

South America
20.2%

1.7
2004

South America 1.0%

Oceania 0%

49.9

36.3

2003

Claims Paid by Region (Commercial)

20

30

40

50

60

6.

70 (Billions of yen)

Recoveries

Recoveries in FY 2005 amounted to ¥228.7 billion, an increase by 125.6% from the previous year.
Claims Paid by Policy Term
Less than 2 years

Recoveries

2 years or more

2001

28.4

2002

30.5

10.3

2003

6.0

2004

0

9

34.6

12.7

6.9

Asia 5.9%

49.9

21.5

65.1

23.0

12.9

1.8
1.9
3.7

2005

Recoveries by Region(Fiscal Year)(Fiscal Year)

10

2001

74.5

2002

70.3

2003

97.7

2004

101.4

2005
20

30

40

50

60

70

80

(Billions of yen)

Africa39.1%

Oceania 0%

Europe39.4%

SouthAmerica
14.7%
228.7

0

50

100

150

200

250

(Billions of yen)

North and Central
America 1.0%

10

Asia

Ⅳ

Ⅳ

Main Projects
Recently Underwritten

Main Projects
Recently Underwritten
Annual Report FY2005

Thailand

VietnamMitsubishi Motors (Thailand) Asia Bond ProjectCampha Cement Plant Project

NEXI provides Overseas Untied Loan Insurance (for guarantee of obligation) for
Thai-baht denominated corporate bonds of 7 billion baht targeted at Thai
investors. The bonds were issued by Mitsubishi Motors (Thailand) Co., Ltd., asubsidiary of Mitsubishi Motors Corporation, and guaranteed by the Bank ofTokyo-Mitsubishi UFJ, Ltd. NEXI provides cover for the bank.
NEXI’s insurance cover is contributing to the development of the local-currency
denominated bond market in Asia and to the financing activities of Japaneseaffiliated companies.

NEXI has underwritten the Buyer’s Credit Insurance for a loan amounting toapproximately JPY 1.9 billion extended by a syndicate of private Japanesefinancial institutions (agent bank: BNP PARIBAS, Tokyo Branch) for the export ofcalcining facilities for the Campha Cement Plant Project being conducted by theSojitz Corporation and Kawasaki Heavy Industries, Ltd. This is a project toconstruct a new integrated cement plant in Cam Thach Ward, Campha Town,
Quang Ninh Province in northern Vietnam.
(The insurance contract was concluded in June 2005.)(The insurance contract was concluded in November 2005.)

ThailandGulf Electric Power Project (Asia Bond)
NEXI underwrote Overseas Untied Loan Insurance (insurance for guarantee ofobligation) in connection with the issuance of Thai-baht denominated corporate
bonds totaling 5.8 billion baht (approximately 17.5 billion yen) by the Gulf
Cogeneration Company Limited (GCC), coordinated by Citibank N.A., Tokyo
Branch and guaranteed by DEPFA BANK plc, Tokyo Branch. GCC is a 99.99%
owned subsidiary of Gulf Electric Public Company Limited, a Thai holding
company engaged in power business, and 49% of its equity shares are owned
by JPOWER of Japan.
(The insurance contract was concluded in April 2006.)

11

12

Rabigh Refining and Petrochemical Project / Related IWSP Project
NEXI has underwritten Trade and Investment Insurance including Overseas
Investment Insurance (which amounts to more than USD 2.2 billion in contracts
and commitments) for the capital funds, etc. provided by Sumitomo ChemicalCo., Ltd. (Sumitomo Chemical) for the project of constructing a refining andpetrochemical integrated plant in Rabigh. Sumitomo Chemical and Saudi Arabian
Oil Company (Saudi Aramco) have established a joint venture company, theRabigh Refining and Petrochemical Company (Petro-Rabigh) to implement the
project. This project will upgrade refining facilities and establish a production
plant for petrochemicals at the existing oil factory in Rabigh that will become oneof the largest refining and petro-chemical complexes in the world. In Saudi
Arabia, it is regarded as a significant project from the perspective of diversifying
industry that will, as a result, contribute to the expansion of employment in the
country.
NEXI also agreed to underwrite Overseas Untied Loan Insurance and Overseas
Investment Insurance (equity investment, etc.) for the guarantee and equity
extended by three Japanese companies, namely Marubeni Corporation, JGC
Corporation and ITOCHU Corporation, for the IWSP project (approximately USD
0.2 billion) in which a business corporation established by the above-mentioned
three companies will supply water, steam, and power to Petro-Rabigh.
Further, a number of Japanese companies have obtained orders for theconstruction and supply of equipment for the production plant of petrochemicals
and IWSP plant. NEXI has agreed to underwrite Export Credit Insurance forthese EPC contracts and also for export contracts for equipment.
Through these insurance contracts, the underwriting amount for this project is
not merely the largest-ever for Saudi Arabia, but it is the largest-ever tradeinsurance underwriting amount for a single transaction.

EuropeThe Middle East

Saudi Arabia

Ⅳ

Main Projects
Recently Underwritten
Annual Report FY2005

Kazakhstan
Mynkuduk Uranium Deposit Eastern Block Expansion Project
NEXI provided Overseas Untied Loan Insurance (OULI) for the loan extended by
Mizuho Corporate Bank to Kazatomprom, Kazakhstan’s state nuclear powercompany, to expand the production capacity of uranium mines in Eastern
Mynkuduk. ITOCHU Corporation will offtake part of the natural uranium
concentrates produced by the project which will also be imported to Japan.
Uranium is an important fuel for Japan to generate nuclear power, but Japan is
totally dependant on foreign imports. In the past, Japan had only a few uraniumtransactions with Kazakhstan although its proved reserve of uranium is ranked
second largest in the world. Through the start of uranium transactions led by thisproject, it is anticipated that this will promote the stable procurement of uranium
and that there will be a decentralization of suppliers for Japan. Providing OULI
for this transaction is very significant, as this will enhance the securing of energy
resources for our country.
(The insurance contract was concluded in November 2005.)(The insurance contracts were concluded from October 2005 to May 2006.)

Sakha Republic, Russian Federation
Project to Increase Production at Neryungri MineNEXI underwrote Overseas Untied Loan Insurance (OULI) to cover a loan
extended by Sumitomo Corporation to Yakutugol, a major coal company in the
Sakha Republic in the Russian Federation. The loan is to be used to financecosts to increase production at Yakutugol’s Neryungri Mine. Coking coalproduced by the Neryungri mine is exported to Japanese steel manufacturers. It
is expected that the production increase will contribute to a stable supply of
coking coal to Japan.
(The insurance contract was concluded in March 2005.)

13

14

Erdemir/Isdemir Iron Works Modernization Project
NEXI provided the Overseas Untied Loan Insurance for a loan extended by
Japanese financial institutions, including BNP Paribas Tokyo Branch and The
Bank of Tokyo-Mitsubishi UFJ, Ltd., to improve and modernize the production
facilities at Ereǧli Demir ve Çelik Fabrikalari T.A.Ş. (Erdemir) and its subsidiary
Iskenderun Demir ve Çelik A.Ş. (Isdemir). The Erdemir Group is the sole
integrated producer of flat steel in Turkey where it is in short supply. It supplies acertain part of its products to Japanese subsidiaries operating in the country, andas such it is expected that an increase in the companies’ production capacity andpromotion of production efficiency through this project will facilitate the offtake offlat steel by local Japanese companies.
(The insurance contracts were concluded in May and December of 2005.)

Annual Report FY2005

BrazilVotorantim Metal Project
NEXI underwrote the Overseas Untied Loan Insurance (OULI) for the US$130
million loan extended by a Japanese financial institution (Bank of TokyoMitsubishi) for Votorantim’s metal related projects. The proceeds of the loan will
be used to finance projects that will improve the environment and enhance theefficiency of the production of nickel, zinc and steel. The Votorantim Group isamongst the largest business groups in Brazil and the largest conglomerate in
Brazil engaged in the production of metal, cement, paper & pulp, etc. This is thesecond OULI transaction for Votorantim underwritten by NEXI.
(The insurance contract was concluded in November 2005.)

TurkeyBrazilIstanbul Otogar-Bagcilar LRT Project

Gerdau Acominas – Production Facility Expansion Project –NEXI underwrote the Overseas Untied Loan Insurance (OULI) for a US$121.5
million loan extended by WestLB AG Tokyo Branch and SMBC to finance the
Otogar-Bagcilar Light Rail Transit (LRT) Project promoted by the Istanbul
Metropolitan Municipality. The Municipality is working to improve its traffic
network to address the congestion and air pollution issues in the city. In thispriority project, the Municipality guarantees the repayment of the loan by theborrower, Istanbul Electric, Tram and Tunnel (IETT). This is the first time for NEXI
to underwrite the sub-sovereign risk of a medium- to long-term project.

NEXI provided Overseas Untied Loan Insurance for the loan amounting to
US$267 million for the project of Gerdau Açominas S.A. to expand theirproduction facilities. Gerdau Açominas S.A. is a leading steel manufacturer inBrazil, and is part of the Gerdau Group. The company has strong ties with Japanthrough technology transfer from major Japanese steel companies, support fromJapan is ongoing and the company uses advanced Japanese technologies suchas its efficient production management system. This is the second transaction for
NEXI to provide insurance for a loan to the company, following the support
extended in 2004.

(The insurance contract was concluded in January 2006.)

15

Latin America

EuropeTurkeyⅣ

Main Projects
Recently Underwritten(The insurance contract was concluded in May 2006.)

16

A f r i c a Latin America

Ⅳ

Main Projects
Recently Underwritten
Annual Report FY2005

Venezuela

Reinsurance (Reinsured Projects)

Additional Project of Rail Yard/Signal/Communication System
Project for Venezuela National Railways’ Suburban Line in Caracas

NEXI is working on achieving policy objectives in fields where the government
intends to strengthen the competitiveness of Japanese industry through newinternational expansion such as the field of aircraft by providing reinsurance toother export credit agencies.

Marubeni Corporation is to export additional facilities for a rail yard/signals/
communication system to Venezuela’s Instituto Autonomo de Ferrocarriles delEstado (Venezuela National Railways). As a settlement fund for this exporttransaction, Japanese financial institutions, including the Japan Bank forInternational Cooperation (JBIC) will provide a loan totaling JPY 15.8 billion.
NEXI has underwritten the Buyer’s Credit Insurance for the loan amounting to
JPY 6.3 billion, which is the portion extended by private financial institutions.
The facilities are supplementary to the first-phase construction of the Suburban
Line Project, currently under construction, that was undertaken in 1992. The
project will contribute to the improvement of commuting conditions, such ascommuting time to Caracas, to the alleviation of traffic jams, and also to thedevelopment of the surrounding area.

In June 2005, based on the Reinsurance Agreement concluded with the US EXIM Bank, an export credit agency in the US, NEXI underwrote reinsurance for theexport transaction of Boeing 767 aircraft to Ethiopian Airlines. Japanesecompanies play a major part in the manufacture of Boeing 767 aircraft by taking
part in the development and the manufacture of the airframes and the supply ofengine parts.

(The insurance contract was concluded in December 2005.)

Equatorial Guinea
Liquefied Natural Gas Project
Marubeni Corporation and Mitsui & Co., Ltd. are taking part in a liquefied naturalgas (LNG) project that is being jointly promoted by Marathon Oil Corporation and
the National Oil Company of Equatorial Guinea in the Republic of Equatorial
Guinea in West Africa. NEXI has underwritten Overseas Investment Insurance
for the financial investment provided for this project. (The amount of investment
from the two companies comes to JPY28 billion.) Equatorial Guinea has only ashort history of oil/gas development and relations are being built between Japanand the country. Therefore this transaction is significant in that it will help support
Equatorial Guinea and contribute to maintaining future energy resources forJapan.
(The insurance contract was concluded in November 2005.)

Japanesemanufacturers
Japaneseparts export
Reinsurance
Agreement
US EX-IM Bank

The Boeing Company
Guarantee
Aircraft sale
Debt
Service

Commercial Bank

Ethiopian Airlines
Loan

17

18

Ⅴ
1

Ⅴ

Review of Performancein Fiscal Year 2005

Annual Report FY2005

3

Economic Trends

The Japanese economy continued to recover steadily in FY2005. This was seen not only in an improvement in thecorporate sector, including earnings and capital investment, but also in the form of a gradual improvement in
consumer spending. The overall world economy was also stable, due to high growth in Asia as well as in the UnitedStates, in spite of the negative impact of high oil prices.
Amid such circumstances, Japan’s exports in FY2005 increased 10.7% over the previous year to ¥68.3 trillion.
Japan’s exports to other Asian countries and to the United States showed a significant increase of 9.8% and 11.2%
respectively. The major export items that contributed to this growth were chemicals, steel and cars. Japan’s current
account (preliminary) also increased 3.9% over the previous year, aided by a significant increase in income balance
surplus.
(Japan’s exports)(Billions of yen)

Summary of Underwriting■ Underwritten Amount by Insurance TypeThe total underwritten amount in FY2005 was ¥12,845.8 billion, up 11.1% from the previous year. In terms of type of
insurance, Export Credit Insurance was the largest at ¥11,543.3 billion, an increase of 9.5% over the previous year.
This was followed by Overseas Untied Loan Insurance of ¥898.5 billion, an increase of 38.2%.

(Billions of yen/Millions of U.S. dollars)

FY2005

Type of Insurance

FY2001

FY2002

FY2003

FY2004

Export Credit Insurance

9,660.2

9,926.2

10,221.5

10,545.9

11,543.3$98,266

89.9

9.5

Less than 1 year

8,615.8

9,203.5

9,578.0

9,857.1

10,890.8$92,711

84.8

10.5

Composition(%)

Year-to-yearchange (%)

Fiscal Year

2001

2002

2003

2004

2005

1 year or more

1,044.4

722.7

643.6

688.8

652.5

$5,554

5.1(5.3)

Total exports

48,592.8

52,727.1

56,060.3

61,719.4

68,296.3

Buyer’s Credit Insurance

77.7

256.7

575.4

261.4

198.6

$1,6901.5(24.0)

(6.6)

8.5

6.3

10.1

10.7

Export Bill Insurance

60.6

53.5

41.9

41.6

38.1

$325

0.3

(8.4)

Export Bond Insurance

50.2

0

0

0

0

$0

0.0

–

Prepayment ImportInsurance

1.8

0.6

0.8

1.8

2.0

$17

0.0

12.1

Overseas Investment
Insurance

55.6

41.8

63.8

55.1

156.8

$1,335

1.2

184.6

Overseas Untied Loan
Insurance

230.6

339.3

214.8

650.3

898.5

$7,6497.0

38.2

Trade Insurance for
Manufacturers

–

–

1.2

2.7

8.1

$69

0.1

201.9

Export Credit Insurance
for SMEs

–

–

–

–

0.4

$3

0.0

–

10,136.6

10,618.0

11,119.3

11,558.8

12,845.8$109,354

100.0

11.1

Year-to-year change (%)(Source: Trade Statistics, Ministry of Finance)

2

Review of Performancein Fiscal Year 2005

Summary of Trade and Investment Insurance Business■ Underwritten Amount(Billions of yen)

Fiscal Year

2001

2002

2003

2004

2005

Year-to-year change (%)

Underwritten Amount

10,136.6

10,618.0

11,119.3

11,558.8

12,845.8

11.1(Note 1) The above figures show only the insurance amount originally underwritten by NEXI.

Total■ Outstanding Commitment(Billions of yen)

Fiscal Year

2001

2002

2003

2004

2005

Year-to-year change (%)

Outstanding Commitment

7,549.1

7,874.2

8,593.9

9,306.5

10,665.0

14.6

Year-to-year change (%)(Note 6) The above figures show only the insurance amount originally underwritten by NEXI.
(Note 7) In April 2005, Buyer’s Credit Insurance was developed independent from Export Credit Insurance. However, forconvenience of comparison, Export Credit Insurance figures before 2004 include buyer’s credit related figures.

(Note 2) The above figures show only the insurance amount originally underwritten by NEXI.

■ Operating Income(Billions of yen)

Fiscal Year

2001

2002

2003

2004

2005

Premium income

37.4

29.1

44.8

41.2

40.1

(2.7)

Recoveries

74.5

70.3

97.7

101.4

228.7

125.6

Total

111.9

99.4

142.5

142.6

268.8

88.5

(Note 3) Premium income derived only from insurance originally underwritten by NEXI.
(Note 4) Recoveries are on a payment notice receipt basis.
(Note 5) Because of the rounding up or down of the fractions, the sum of the items in the columns above does not necessarily
coincide with the total amount. (The same applies hereafter.)■ Claims Paid

19

(Billions of yen)

Fiscal Year

2001

2002

2003

2004

2005

Year-to-year change (%)

Claims paid

49.9

65.1

23.0

12.9

3.7

(71.5)

20

Review of Performancein Fiscal Year 2005

Ⅴ

Annual Report FY2005■ Amount Underwritten by Region

4

In terms of a regional breakdown based on original insurance, the largest share of ¥6,826.0 billion was Asiantransactions, and this was followed by North and Central American transactions of ¥3,745.9 billion. Africantransactions showed the sharpest increase at 35.0% over the previous fiscal year.

■ Outstanding Commitment by Type of Insurance(Billions of yen/Millions of U.S. dollars)

RegionComposition(%)

Year-to-yearchange (%)$58,109

47.9

18.5

2,321.2$19,760

16.3

2.7

3,602.1

3,745.9$31,888

26.3

238.3

390.0

412.5

$3,511

402.6

293.5

306.8

414.2

341.2

433.8

497.1

527.7

FY2005

FY2001

FY2002

FY2003

FY2004Asia

4,334.6

4,930.6

5,633.4

5,758.3

6,826.0

Europe1,708.3

1,799.9

2,373.6

2,259.9

North andCentral America

4,074.3

4,036.4

3,370.4

South America

379.0

226.8

Africa273.8

Oceania276.2

Outstanding Commitment

The total outstanding commitment in FY2005 was ¥10,665.0 billion, up 14.6% from the previous year. Export Credit
Insurance produced the largest amount of ¥6,909.2 billion, followed by Overseas Untied Loan Insurance of ¥1,989.0
billion.
(Billions of yen/Millions of U.S. dollars)

FY2001

FY2002

FY2003

FY20044.0

Export Credit Insurance

4,959.8

5,097.5

5,608.0

6,017.7

6,909.2

2.9

5.8

Less than 1 year

3,410.3

3,493.2

3,997.5

4,429.1$3,5262.9

35.0

1 year or more

1,549.5

1,604.3

1,610.5$4,492

3.7

6.1

Buyer’s Credit Insurance

979.1

1,047.0

Export Bill Insurance

15.4

Export Bond Insurance
Prepayment ImportInsurance(Note 8)Classification used to compute the above amount:Pre-shipment: Country of the shipment consignee
Post-shipment: Country of the payer (or country of the guarantor when guaranteed)(Note 9) The amount includes transactions that are doubly computed, i.e. for both pre-shipment (country of the consignee) andpost-shipment (country of the payer).
(Note 10) The above figures show only the insurance amount originally underwritten by NEXI.
(Note 11) Middle East and Central Asia are included in Asia. (The same applies hereafter.)(Note 12) Central and Eastern Europe and Russia are included in Europe. (The same applies hereafter.)■ Top Ten Countries and Regions of Underwritten Amount in FY2005

Composition(%)

Year-to-yearchange (%)$58,817

64.8

14.8

5,286.3$45,001

49.6

19.4

1,588.7

1,622.9$13,816

15.2

2.2

1,387.4

1,406.8

1,278.9$10,887

12.0

(9.1)

10.5

9.4

9.4

7.9

$67

0.1

(16.5)

9.9

8.3

6.8

5.6

5.6

$48

0.1

0.0

0.8

0.3

0.5

1.5

2.1

$18

0.0

40.6

Overseas Investment
Insurance

747.0

630.3

533.2

458.2

461.4

$3,9284.3

0.7

Overseas Untied Loan
Insurance

837.2

1,080.4

1,047.3

1,403.3

1,989.0$16,932

18.6

41.7

Trade Insurance for
Manufacturers

–

–

1.2

3.8

10.7

$91

0.1

178.9

Export Credit Insurance
for SMEs

–

–

–

–

0.1

$1

0.0

–

7,549.1

7,874.2

8,593.9

9,306.5

10,665.0$90,789

100.0

14.6

(Billions of yen/Millions of U.S. dollars)

OrderCountry/Region

1

U.S.A.

2,648.6$22,54718.6

2

People’s Republic of China

1,114.8$9,490

7.8

3

Saudi Arabia

664.8$5,659

4.7

4

Qatar

561.6

$4,781

3.9

5South Korea

506.5$4,311

3.6

6

Taiwan505.0$4,2993.5

7Australia

454.2$3,867

3.2

8Thailand

447.7$3,811

3.1

9

Panama (flag of convenience vessel)

444.3$3,782

10

Belgium

420.8$3,582

Underwritten amount

FY2005

Type of Insurance

Composition (%)

Total(Note 13) The above figures show only the insurance amounts originally underwritten by NEXI.
(Note 14) In April 2005, Buyer’s Credit Insurance was developed independent from Export Credit Insurance. However, forconvenience of comparison, Export Credit Insurance figures before 2004 include buyer’s credit related figures.

■ Outstanding Commitment by Region
In terms of region, Asia accounted for the largest amount of ¥7,030.1 billion, up by 23.3% from the previous year.
Oceania and Africa also increased, by 21.9% and 8.0% respectively.
(Billions of yen/Millions of U.S. dollars)
RegionComposition(%)

Year-to-yearchange (%)$59,846

64.7

23.3

1,080.0$9,1949.9

2.5

1,659.5

1,638.5$13,948

15.1

(1.3)

591.7

701.4

730.0

$6,215

6.7

4.1

517.7

393.2

220.9

238.6

$2,031

2.2

8.0

72.2

108.0

122.9

149.8

$1,2751.4

21.9

FY2005

FY2001

FY2002

FY2003

FY2004Asia

4,396.0

4,719.8

5,228.1

5,700.1

7,030.1

3.1

Europe

684.7

693.8

990.2

1,053.3

3.0

North andCentral America

1,476.0

1,427.7

1,461.5

South America

658.0

607.6

Africa349.9

Oceania

86.4(Note 15) Classification used to compute the above amount:Pre-shipment: Country of the shipment consignee
Post-shipment: Country of the payer (or country of the guarantor when guaranteed)(Note 16) The amount includes transactions that are doubly computed, i.e. for both pre-shipment (country of the consignee)and post-shipment (country of the payer).
(Note 17) The above figures show only the insurance amounts originally underwritten by NEXI.

21

22

Review of Performancein Fiscal Year 2005

Ⅴ

Annual Report FY2005

Insurance Claims Paid

5

■ Insurance Claims Paid by Insurance Type and by Risk
The total amount of claims paid in FY2005 decreased 71.5% over the previous year to ¥3.7 billion. This was attributed
to the fact that no major political or commercial risk event occurred in the fiscal year under review, reflecting a stableworld economy including high resource prices.
(Billions of yen/Millions of U.S. dollars)

FY2002

FY2003

Type of
Insurance

Total

Political CommerRisk cial Risk

Total

Recoveries

6

FY2004

FY2005

Political CommerPolitical CommerRisk cial Risk Total
Risk cial Risk

Political Risk

Total

CompoCommercial Risk sition (%)

Year-toyearchange(%)

Recoveries for FY2005 totaled ¥228.7 billion, an increase of ¥127.3 billion (by 125.6%) from ¥101.4 billion in theprevious year. The result was attributed to the Paris Club debt repayment made ahead of schedule by countries suchas Nigeria and Russia. In terms of risk, commercial risk recoveries accounted for 1.3% (¥3.0 billion) of the total
recoveries. The remaining 98.7%, or about ¥225.7 billion, is concerned with political risk events. The top five
recoveries in terms of country in FY2005 were ¥80.7 billion from Nigeria (¥9.7 billion in the previous year), ¥69.3
billion from Russia (¥10.7 billion in the previous year), ¥29.4 billion from Brazil (¥27.2 billion in the previous year),¥19.2 billion from Poland (¥23.0 billion in the previous year), and ¥6.7 billion from the Philippines (¥6.9 billion in theprevious year), which accounted for 89.8% of the total recoveries.

Export Credit Insurance

45.5

31.5

13.9

19.7

9.8

10.0

7.3

1.4

5.9

3.0

$25

1.3

$11

1.7

$15

80.5

(59.5)

Buyer’s Credit Insurance

4.2

4.2

–

0.4

0.4

0

0

0

0

0

$0

0

$0

0

$0

0

–

Export Bill Insurance

0.3

0

0.3

0.2

0

0.2

0.0

0

0.0

0.1

$0

0.0

$0

0.1

$0

1.5

63.6

Export Bond Insurance

0

0

0

0

0

0

0

0

0

0

$0

0

$0

0

$0

0

–

Prepayment ImportInsurance
Overseas Investment
Insurance
Overseas Untied Loan
Insurance
Trade Insurance for
Manufacturers
Export Credit
Insurance for SMEs

0

0

0

0

0

0

0

0

0

0

$0

0

$0

0

$0

0

–

0

0

0

0.5

0.5

0

0.2

0.2

0

0

$0

0

$0

0

$0

0 (100.0)

15.2

0.6

14.6

2.1

0.1

2.0

5.3

0.1

5.2

0.7

$6

0.7

$6

0

$0

17.7

(87.8)

Commercial Risk

1.0

3.0

–

–

–

0

0

0

0

0

0

0.0

$0

0

$0

0.0

$0

0.1

–

Total Recoveries

74.5

70.3

–

–

–

–

–

–

–

–

–

0.0

$0

0

$0

0.0

$0

0.3

–

Total

65.1

36.3

28.8

23.0

10.8

12.2

12.9

1.7

11.2

3.7

$31

1.9

$16

1.8

$15

100.0

(71.5)(Note 18) In April 2005, Buyer’s Credit Insurance was developed independent from Export Credit Insurance. However, forconvenience of comparison, Export Credit Insurance figures before 2004 include buyer’s credit related figures.

■ Insurance Claims Paid by Region(Billions of yen/Millions of U.S. dollars)

FY2002

Region

FY2003

FY2004

FY2005Composition (%)

Year-toyearchange(%)

Total

Political CommerPolitical CommerPolitical CommerRisk cial Risk Total
Risk cial Risk Total
Risk cial Risk

Asia

47.6

19.2

28.4

19.3

7.9

11.4

11.4

0.3

11.1

2.5

$21

1.0

$9

1.5

$12

67.6

(78.2)

Europe

0.1

0

0.1

0.1

0

0.1

0.0

0

0.0

0.0

$0

0.0

$0

0.0

$0

0.4

220.0

Total

Political Risk

Commercial Risk

North and Central
America

0.1

0.0

0.1

0.1

0.0

0.1

0.0

0

0.0

0.3

$3

0.0

$0

0.3

$2

8.7 5216.7

South America

17.0

16.6

0.3

3.3

2.6

0.7

1.3

1.3

0.0

0.7

$6

0.7

$6

0.0

$0

20.2

(42.4)

Africa

0.5

0.5

0

0.3

0.3

0

0.2

0.2

0.0

0.1

$1

0.1

$1

0

$0

3.0

(45.1)

Oceania

0

0

0

0.0

0

0.0

0

0

0

0

$0

0

$0

0

$0

0

–

Total

65.1

36.3

28.8

23.0

10.8

12.2

12.9

1.7

11.2

3.7

$31

1.9

$16

1.8

$15

100.0

(71.5)■ Recoveries by Risk
(Billions of yen/Millions of U.S. dollars)

Political Risk

FY2001

FY2002

FY2003

FY2004

FY2005

73.6

67.3

94.3

94.3

225.7

3.5

7.1

3.0

$25

97.7

101.4

228.7

$1,947$1,922■ Recoveries by Region
In terms of breakdown of recoveries by region, ¥13.4 billion was from Asia, showing a decline of 26.1 % over theprevious year. About 83.2% of the total Asian recoveries are from four countries: the Philippines with ¥6.7 billion (¥6.9
billion in the previous year), Pakistan with ¥1.6 billion (¥0.2 billion in the previous year), Syria with ¥1.5 billion (¥1.5
billion in the previous year), and Indonesia with ¥1.3 billion (¥2.2 billion in the previous year).
Recoveries from Europe were ¥90.0 billion, 155.9% up from the previous year. Most of these were from Russia and
Poland, with ¥69.3 billion (¥10.7 billion in the previous year) and ¥19.2 billion (¥23.0 billion in the previous year)
respectively, accounting for 98.3% of the recoveries from Europe.
Recoveries from North and Central America were ¥2.4 billion, 281.7% up from the previous year, of which ¥1.9 billion(¥0.3 billion in the previous year) is from Cuba and ¥0.2 billion (¥0.2 billion in the previous year) from Antigua andBarbuda, accounting for 90.5% of the recoveries from this region.
The amount of ¥33.5 billion was recovered from South America, with an increase of 13.2% over the previous year.
Three countries, Brazil, Argentina, and Ecuador, occupied 96.1% of the South American recoveries, with ¥29.4 billion(¥27.2 billion in the previous year), ¥1.5 billion (¥0.7 billion in the previous year), and ¥1.3 billion (¥1.0 billion in theprevious year) respectively.
Recoveries from Africa increased 400.8% to ¥89.4 billion. Recoveries from Nigeria, Algeria, and Egypt were ¥80.7
billion (¥9.7 billion in the previous year), ¥4.2 billion (¥3.8 billion in the previous year), and ¥4.1 billion (¥3.9 billion
in the previous year) respectively. The recoveries from those three countries occupied 99.6% of the total recoveries
from Africa.
(Billions of yen/Millions of U.S. dollars)

Region■ Top Five Countries/Regions in terms of Insurance Claims Paid
(Billions of yen/Millions of U.S. dollars)

Order Country/Region

23

Total claims paid

Political Risk

Commercial Risk

1

Iraq

1.0

$8

1.0

$8

0

$0

2

Hong Kong

0.8

$7

0

$0

0.8

$7

Year-to-yearchange (%)

FY2001

FY2002

FY2003

FY2004

Asia

10.4

13.1

13.5

18.1

13.4

$114

5.9

(26.1)

Europe

28.1

23.2

19.6

35.2

90.0

$767

39.4

155.9

North andCentral America

1.7

1.5

1.1

0.6

2.4

$20

1.0

281.7

South America

28.3

25.6

26.4

29.6

33.5

$286

14.7

13.2

6.0

6.9

37.1

17.9

89.4

$761

39.1

400.8

Composition(%)

FY2005

3

Argentina

0.7

$6

0.7

$6

0

$0

Africa4

Taiwan

0.4

$4

0

$0

0.4

$4

Oceania

0

0.0

0

0

0

$0

0.0

–

5

Panama

0.2

$2

0

$0

0.2

$2

Total

74.5

70.3

97.7

101.4

228.7

$1,947

100.0

125.6

24

Financial Results for
Fiscal Year 2005

Financial Results for
Fiscal Year 2005

Annual Report FY2005(Year ending March 31, 2006)

1

Fiscal Year 2005 in Review

2

Financial Statements

Nippon Export and Investment Insurance (NEXI), an independent administrative institution, submitted a financial
statement for its fifth year of operations (fiscal year 2005 ending March 31, 2006) to the Minister of Economy, Tradeand Industry on June 23, 2006 and Ministry approval was obtained as of July 4.

Balance Sheet (As of March 31, 2006)

Overview of Financial Statement

Cash and cash items

42,795

Outstanding claims reserve

Financial highlights for NEXI businessYear end: March 31

Securities

114,031

Reserve for outstanding commitments

12,049Receivables subrogated by paying claims

453,769

Amount due to reinsurance

5,267

Accrued income

90,803

Deposits received

9,702

Accrued premium

7,510

Prepaid insurance premium

7,917(Millions of yen)

FY2001

FY2002

FY2003

FY2004

FY2005(Millions of yen)

(Assets)(Liabilities)
91

Ordinary Income

7,418

6,317

9,436

9,346

11,585

Reinsurance credit

499

Accrued amount payable

37,012

Net premium written

7,390

5,875

9,253

8,571

9,586

Buildings (Note 2)

110

Reserve for bonus payment

136

Interest on securities

–

–

9

567

905

Vehicles (Note 3)

2

Reserve for retirement allowance95

Ordinary expenses

9,156

5,492

8,505

7,027

7,544

2

78

402

75

74

Operating and administrative
expenses

4,835

4,543

4,705

4,897

5,476

Provision for outstanding
commitments reserve

4,087

647

3,327

1,980

2,008

Net claims paid

Ordinary profit (loss)(1,738)

825

931

2,319

4,041

Extraordinary profit (Note)

20,1406,408

17,112

3,173

52,501

Total profit

18,402

7,233

18,043

5,492

56,542

Total assets

150,084

166,125

217,309241,292

398,588

Net assets

122,754

134,815

183,712

198,908

326,131(Note) The profits and losses of assets acquired by subrogation and contributed in-kind by the government have beenentered as extraordinary profit (and loss) in accordance with the ministerial ordinance on the finance and accountingof the Independent Administrative Institution Nippon Export and Investment Insurance (Ordinance No. 104 of
Ministry of Economy, Trade and Industry, March 29, 2001)

Profits and Losses
Ordinary profit for the fiscal year ending March 2006 came to ¥4,041 million, due to an increase in net premium
written and interest on securities. The increase in net premium written amounted to ¥9,586 million, up 11.8%
compared with the previous fiscal year. This was attributed to a decline of premium paid for reinsurance due to the
reduction of reinsurance cover percentage from 95% to 90%. Recoveries from debtor countries were invested as
excess cash in government bonds and other securities. As a result, interest on securities was ¥905 million, up ¥338
million from the previous fiscal year.
As for extraordinary profit, the valuation amount and interest of receivables contributed in-kind by the government
were entered as extraordinary profit. Reversal of provision for uncollectible receivables was ¥35,325 million,
reflecting increased recoveries from debtor countries such as Russia. As a result, extraordinary profit amounted toEquipment and fixtures (Note 4)

443

Other liabilities

189

Deposits390

Total liabilities

72,458Suspense payments

4,112

Accounts receivable

16

Other assets
Allowance for uncollectible receivables(Funds and surplus)
Capital675(316,566)

104,352

Government investment

140,652

Capital surplus (Note 5)
Retained earnings

Total Assets

398,588

Surplus reserve

24,585

Unappropriated retained earnings

56,542(of which Net profit of the current year)

56,542

Total retained earnings

81,127

Total funds and surplus

326,131

Total liabilities, funds and surplus

398,588(Note 1) Amounts between one million yen and 500 thousand yen were rounded up to one million yen.
Amounts less than 500 thousand yen were omitted.
(Note 2) The accumulated depreciation of buildings is ¥95 million.
(Note 3) The accumulated depreciation of vehicles is ¥5 million.
(Note 4) The accumulated depreciation of equipment and fixtures is ¥1,566 million.
(Note 5) The breakdown of capital surplus is as follows:
Appraisal difference of receivables subrogated by paying claims(Millions of yen)Appraisal difference of receivables subrogated by paying claims

45,386

Appraisal difference of rescheduled receivables

49,225

Evaluation difference of commercial risk subrogated receivables(3,838)

Evaluation difference of capitalized amount

95,265

Total

140,652¥52,501 million and the total profit was ¥56,542 million.

Appropriation of Profit
As the first medium-term objective period ended in the fiscal year ending March 2005 (FY2004), the surplus reserveof ¥24,585 million were transferred to the national treasury in July 2005. The total profit of ¥56,542 million was fullytransferred to the surplus reserve.

25

26

Financial Results for
Fiscal Year 2005
Annual Report FY2005

Statement of Income (From April 1, 2005 to March 31, 2006)(Millions of yen)

Statement of Cash Flows (From April 1, 2005 to March 31, 2006)(Millions of yen)

I. Cash flows from operating activities
Ordinary income
Underwriting income
Net premium written (Note 2)

Premium received

43,845

9,671

Reinsurance premium paid

(36,008)

9,586

Insurance claims paid

(3,680)

Reversal of outstanding claims provision

83

Reinsurance claims received

3,711Interest income on receivables subrogated by paying claims

2

Income from recovery of receivables subrogated by paying claims

65,968Investment income
Ordinary profit and loss

11,585

199,380(199,153)

Interest on securities

905

Payment of recovered receivables subrogated to the government

720

Personnel expenses(1,541)Others15

Other operating expenses(2,560)15

OthersOther ordinary income
Ordinary expenses

0
Subtotal

7,544

Underwriting expenses

2,063

Net claims paid (Note 3)

74

Provision for outstanding commitments reserve
Operating and administrative expenses

(19)
2,008

(3)

Net cash provided by operating activities

60,477

II. Cash flows from investing activities
Decrease in time deposits

23,000

3

Purchase of securities(38,822)02Redemption of securities

0

4,041

Purchase of fixed assets(3,648)53,879(Increase) in deposits

Profit relating to in-kind contribution of receivables acquired by government subrogation (Note 5)

18,554

Reversal of provision for uncollectible receivables relating to in-kind contribution of receivables acquired by government subrogation

35,325Extraordinary loss

5,363

Interests and dividends paid

(Increase) in time deposits

Other ordinary expenses
Extraordinary profit

Interests and dividends received

5

Interest paid
Ordinary profit

55,117

5,476

OthersExtraordinary
profit and loss

(14,846)

Income from recovery of receivables subrogated to the government

Foreign exchange gain

Estimated amount of insurance claims recovery (Note 4)0

Net cash (used in) provided by investing activities
III. Cash flows from financing activities

1,378

Payment by transfer of retained earnings to the national treasury

Losses relating to in-kind contribution of receivables acquired by government subrogation (Note 5)

1,378

Finance lease payment

Total profit for the current year

56,542(Notes)
1. Amounts between one million yen and 500 thousand
yen were rounded up to one million yen. Amounts
less than 500 thousand yen were omitted.
2. The breakdown of net premium written is as follows:(Millions of yen)

Premium of original insurance written
Refund of premium paid for reinsurance
Premium received for reinsurance
Premium paid for reinsurance
Total

40,0881,670
223(32,395)
9,586

3. The breakdown of net claims paid is as follows:(Millions of yen)

Insurance claims paid
Reinsurance claims recovered
Total

27

Payment of recovered receivables subrogated by paying claims

274

1,179

Income from interest

3,680(3,606)74

5. The profits and losses of receivables acquired by subrogation and contributed in-kindby the government were entered as extraordinary profit and loss in accordance with
Article 2 of the supplementary provision of the ordinance concerning the finance andaccounting of the Independent Administrative Institution Nippon Export andInvestment Insurance (Ordinance of No. 104 of Ministry of Economy, Trade andIndustry on March 29, 2001).
(1) The breakdown of profit relating to in-kind contribution of receivables
acquired by government subrogation(Millions of yen)Interest income from receivables acquired by subrogation and contributed in-kind by the government
Recovery of non-rescheduled receivables acquired by subrogation and contributed in-kind by the government
Recoveries of write-offs
Foreign exchange gain on receivables acquired by subrogation and contributed in-kind by the government
Other extraordinary profit
Total

13,788
518
4
3,975
268
18,554(2) The breakdown of loss relating to in-kind contribution of receivables
acquired by government subrogation(Millions of yen)
Bad debts loss
1,266
Recognized amount of receivables acquired by subrogation and contributed in-kind by the government
76
Other extraordinary loss
37
Total
1,378

4. The breakdown of the estimated amount of insurance claims recovery is as follows:(Millions of yen)a Difference of capitalized value between the current year end and the previous year end concerning estimated recovery of commercial event receivables subrogated by paying claims(17)b Recovery of commercial event receivables subrogated by paying claims(1)c Recovery of political event receivables subrogated by paying claims that are not capitalized(0)d Provision for uncollectible receivables
0
(19)
Total

(19,470)(24,585)(297)

Net cash (used in) provided by financing activities(24,881)

IV. Foreign exchange difference related to cash and cash equivalents

1,584

V. Net increase (decrease) in cash and cash equivalents

17,709VI. Cash and cash equivalents at the beginning of the current year

25,086

VII. Cash and cash equivalents at the end of the current year

42,795(Note 1) Amounts between one million yen and 500 thousand yen were rounded up to one
million yen. Amounts less than 500 thousand yen were omitted.
(Note 2) The breakdown of cash at the end of the current year by title of balance sheet is
as follows:(Millions of yen)

Cash and cash items

24,705Time deposits

18,090

Balance of cash at the end of the current year

42,79528

Financial Results for
Fiscal Year 2005
Annual Report FY2005

IV. Translation of accounting titles distinctive to NEXI

Notes
I. Important Accounting Principles
1. Accounting procedures of depreciation(1) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets purchased with a value
exceeding ¥200,000, either singly or by set, has been calculated byadopting a straight-line depreciation method. This is in accordancewith estimated serviceable life stipulated in the Corporate Tax Law
defining residual value as 10% of the purchase value. However, thedepreciation of buildings (limited to incidental facilities), has been
calculated by a straight-line depreciation method that sets its
residual value at ¥1 as the memorandum value.
(2) Amortization of intangible fixed assets
Amortization of the trademark right has been calculated by astraight-line depreciation method which fixes its residual value at ¥0in accordance with the estimated serviceable life stipulated in the
Corporate Tax Law.
Amortization of computer software with a four year availability period
being used in-house has been calculated by a straight-line
depreciation method that sets its residual value at ¥0 by applying therelative availability period to the estimated serviceable life.
However, part of the computer software will be replaced by the new
system after the fiscal year ending March 2007. Amortization of thesoftware that will be disused has been calculated by applying March
2006 to the termination date of the estimated serviceable life,
notwithstanding the remaining period of its availability.

2. Calculation basis of the reserve for retirement allowancesand estimate

In order to prepare for retirement allowances payments for board
members and employees, a reserve is provided based on 100% of
the amount of retirement allowances that are required by the rules of
payment of retirement allowances for board members and also by
those that apply to employees respectively.

3. Calculation method of reserve for outstanding commitments,
outstanding claims reserve, receivables subrogated bypaying claims and allowance for uncollectible receivables

Reserve for outstanding commitments, outstanding claims reserve,
receivables subrogated by paying claims and allowance foruncollectible receivables have been booked with the respective
amount which has been calculated in accordance with the following
ordinance: “Concerning the calculation methods ordained by the
Minister of Economy, Trade and Industry, pursuant to the articles ofthe ministerial ordinance with regard to the finance and accounting of
the Independent Administrative Institution Nippon Export andInvestment Insurance” (2006 · 02· 28 Trade No.4).

4. Calculation basis of reserve for bonus payments andestimate

In order to prepare for payment of bonuses for board members andemployees, a reserve is provided based on the amount that remains
in the current fiscal year according to the rules of remuneration ofboard members and employees respectively.

5. Appreciation basis and method for securities(1) Appreciation of bonds that are owned for the purpose of being
held until maturity has been carried out by adopting an amortizedcost method (straight-line method).
(2) Appreciation of the remaining bonds that do not have a market
price has been carried out by adopting a moving average cost
method.

6. Appreciation method of money claims and debts in foreign
currencies

Money claims and debts in foreign currencies have been translated
into Japanese yen at the exchange rates prevailing at the end of the
fiscal year.

29

7. Calculation method of opportunity costs in the statement ofadministrative services cost (The rest is omitted.)
8. Accounting and depreciation methods applied to leasetransactions

Financial lease transactions have been booked in accordance withthe accounting procedures of typical sales transactions. Depreciation
has been booked by a straight-line method, which sets its residual
value at ¥0 by applying the relative contract period as its estimatedserviceable life.

9. Change in accounting principles(1) Change in appreciation method of assets acquired by subrogationand contributed in-kind by the government
In the past fiscal years, the appraisal difference of assets acquiredby subrogation and contributed in-kind by the government (except
for accrued income) was included in capital surplus, in accordancewith Article 2 of the supplementary provision of the ordinanceconcerning a partial revision of the ministerial ordinance with regard
to the finance and accounting of the Independent Administrative
Institution Nippon Export and Investment Insurance (Article 49 ofOrdinance of Ministry of Economy, Trade and Industry, March 31,2003). This ordinance was revised by ordinance No. 100 on October28, 2005. Under the revised ordinance, the appraisal value
associated with the capitalization of assets acquired by subrogationand contributed in-kind by the government has been excluded fromextraordinary profit and loss. As a result of this revision, extraordinary
profit and total profit of the current fiscal year increased by ¥23,438
million respectively. Accordingly, capital surplus declined ¥23,438
million.
(2) Change in reporting commercial event receivables subrogated bypaying claims and the appreciation method
In the past fiscal years, commercial event receivables subrogated bypaying claims were reported as estimated recovery amount inaccordance with the ordinance concerning the calculation methods
ordained by the Minister of Economy, Trade and Industry, pursuant tothe articles of the ministerial ordinance with regard to the financeand accounting of the Independent Administrative Institution Nippon
Export and Investment Insurance (2001· 03· 27 Trade No.2). This
ordinance was revised by 2006 ·02· 28 Trade No.4. Under therevised ordinance, the commercial event receivables subrogated bypaying claims were included in receivables subrogated by paying
claims. Allowance for uncollectible receivables is made depending
on characteristics of receivables.
As a result of this revision, extraordinary profit decreased ¥38 million,
and extraordinary loss decreased ¥1,379 million. The total profit forthe current fiscal year increased ¥1,341 million. Receivables
subrogated by paying claims, suspense payments and allowance foruncollectible receivables increased ¥6,263 million, ¥83 million and¥6,674 million respectively. Capital surplus decreased ¥1,835
million.

10. Change in financial statement form

In the past fiscal years, NEXI’s statement of income was made basedon Appendix 2 of the ordinance concerning a partial revision of theministerial ordinance with regard to the finance and accounting of
the Independent Administrative Institution Nippon Export andInvestment Insurance (Article 49 of Ordinance of Ministry of
Economy, Trade and Industry, March 31, 2003). As a result ofrevision of this ordinance, a new statement of income form wasapplied.

II. Important Debt Assumption Undertaken

TitlesTranslation

Receivables subrogatedby paying claims

Total assets of receivables subrogated by NEXI’s paying claims and estimated amount ofpotential subrogated receivables with regard to the outstanding claims reserve

Accrued premium

Accrued insurance premium due from policyholders arising from insurance
contracted

Reinsurance credit

Receivables arising from reinsurance provided by the government
Accrued premiums on reinsurance to be refunded by the government
Accrued reinsurance claims to be paid by the government

Outstanding claims reserve

Amount considered necessary in order to cover incurred losses under an insurance contract
or losses recognized as having been incurred at the end of the fiscal year

Reserve for outstanding
commitments

Amount reserved in order to prepare for possible future claim payments under insurance andreinsurance contracts.

Amount due to the reinsurer

Amount to be paid by NEXI to the government under reinsurance contracts

Prepaid insurance premium

Insurance premium received with NEXI’s obligation starting from the next fiscal year or later

Net premium written

Amount calculated by deducting reinsurance premium paid from premium written. Premium
written is the total amount of premium of original insurance written and premium received forreinsurance.

Net claims paid

Amount calculated by deducting reinsurance claims recovered from insurance claims paid.
Insurance claims paid are the total amount of original insurance claims paid and reinsurance
claims paid.

Estimated amount of
insurance claims recovery

The total of the following amounts:
Capitalized amount of receivables subrogated by paying claims
Recovery of receivables subrogated by paying claims that are not capitalized
Difference of value between the current fiscal year end and the previous fiscal year end,of the estimated amount of potential subrogated receivables capitalized in association
with the outstanding claims reserve

Reversal of outstanding
claims provision

Reversal of outstanding claims provision for the current fiscal year

Provision for outstanding
commitments reserve

Provision for outstanding commitments reserves for the current fiscal year

Capital surplus
Appraisal difference ofreceivables subrogated bypaying claims

Appraisal difference of in-kind contribution of receivables acquired by government
subrogation is processed based on Article 2 of the supplementary provision of the ministerial
ordinance with regard to the finance and accounting of the Independent Administrative
Institution Nippon Export and Investment Insurance (Ordinance of Finance and Accounting).

Appraisal difference of inkind contribution ofreceivables acquired bygovernment subrogation

With regard to the fiscal years ending March 2003, 2004 and 2005, the appraisal differenceof receivables acquired by subrogation and contributed in-kind by the government (except
for accrued income) was included in the capital surplus, in accordance with the ordinanceconcerning a partial revision of the Ordinance of Finance and Accounting (Article 49 ofOrdinance of Ministry of Economy, Trade and Industry, March 31, 2003).

Appraisal value associatedwith the capitalization ofreceivables acquired bysubrogation and contributed
in-kind by the government

The Ordinance of Finance and Accounting was partially revised by the ordinance No. 100 of
October 28, 2005. Since the fiscal year ending March 2006 (FY2005), receivables acquiredby subrogation and contributed in-kind by the government that were capitalized andappraised for the first time have been included in the capital surplus.

Not applicable

III. Important Subsequent Events
Not applicable30

Second Medium-Term Objectives
Annual Report FY2005

Second Medium-Term Objectives

Nippon Export and Investment Insurance (NEXI) has set the medium term-objectives for the second termof FY2005 to FY2008 and will enforce various measures and policies based on these objectives.
A summary of these objectives is outlined below.

1

Improving the quality of NEXI’s services and other operations(1) Improvement of products
From the perspective of securing the international competitiveness of Japanese companies, we will take thecustomers’ demands and requirements for trade and industry policies into consideration and, in order toprovide high-quality services equal to those in other foreign countries, we will improve and develop our
products through a complete revision of the comprehensive insurance with the exporters’ associations schemeand of the insurance products that we currently offer.

(2) Improvement of services
Adopting the perspective of the customers at all times, we will make efforts to improve and enhance ourservices by lightening the burden on the customer and promoting prompt decision-making/businessproceedings in addition to fully enforcing the observance of compliance and building on the relationship of trustthat we have with our customers. Further, the changes will enable us to perceive customers’ needs with greater
accuracy and create a system where it is possible to offer services that are more convenient for our customers.

(3) Streamlining the system to perceive and reflect customers’ needs andenhance risk analysis/assessment
We will increase the publicity activities of existing insurance products and address our customers’ needs withgreater accuracy, making use of customer feedback on our insurance products as well as streamlining thesystem to improve risk analysis/assessment methods.
In order to strengthen the assessment of underwriting, information-gathering capacity, and recovery functions,
we will increase the efficiency of the organic linkage system with domestic and international institutions,
including the Japanese government, and also give further multifaceted and effective support to overseas
transactions by Japanese companies.

(4) Emphasizing strategic priority policy issues
In light of our role as the public institution responsible for developing Japan’s overseas transactions and taking
heed of requirements regarding Japan’s trade policies, industrial policies, natural resources and energy
policies, etc. we will give priority to accomplishing these policy issues. In order to do so, we will qualitatively
and quantitatively expand the insured risks regarding these areas.
At the same time we will take the initiative in addressing issues in great demand by our customers, including
consideration for the environment and social issues and will make every effort to fulfill our social
responsibilities as a public institution.

2

Efficiency of business operations(1) Promoting efficiency of business operations
Our staff will be trained to be thoroughly cost-conscious by giving full consideration to the cost-effectiveness ofthe disbursement of expenses, in order to improve the efficiency of our business operations.
i. We will at all times closely monitor our organizational structure and personnel distribution so that they canappropriately deal with their workload. Further we will do our best to carry out necessary revisions as well as
increasing cost-effectiveness.
ii. Our goal for FY2008 is to reduce the workforce by at least 3% compared with FY2005, and for this purpose
will take the necessary measures. We will also make necessary revisions in our board members’ andemployees’ salaries.
iii. We will promote the efficiency of business operations through consignment of part of our office work andbusiness operations to private financial institutions, etc.

(2) Efficient development and smooth operation of the next generation information system
As for the development of our next generation information system, we will take all possible measures to ensurethat effective development will be continued to maximize the effectiveness of investment, while appropriately
managing the development schedule.
We will improve the services to our customers and realize efficient and prompt business operations (including,in addition to development and sale of new products, reinsurance by the government and smooth response toasset management) through a smooth transition from the current information system, the promotion of an
efficient and prompt system maintenance/additional alteration after the new system is put in operation.

3

Improvement in composition of finances(1) Reinforcement of financial grounds
In order to continuously and stably offer our customers an “assured peace of mind,” we will improve theefficiency of business operations and hold down expenditure based on appropriate risk management, as wellas enhance our finance grounds through the appropriate management of debts brought about by insured risks
and strengthening of the recovery system.

(2) Reinforcement of credit management/recovery
i. We will strengthen our recovery capacity through the appropriate management of credit data and close
coordination with relevant organizations.
ii. We will feed back the know-how accumulated through assessment/recovery operations of specifictransactions and enhance our risk management.
iii. As for debts caused by insured risks, we will appropriately control them and improve their assessment andanalyzing methods as well as execute precise accounting.

(5) Smooth entry of private insurers into the market
As for our efforts toward the improvement of our products, the introduction of choice of coverage system in therevision of the comprehensive insurance with the exporters’ association extends our customers’ choice ofcover to private insurance companies, preparing a suitable environment that facilitates the smooth entry ofprivate insurers.

31

4

Fostering of personnel with high degree of specialist knowledge(personnel administration)

We will further elevate specialization of our staff through an enriched in-service training system,
implementation of an efficient personnel system that takes into account the development of specialist
knowledge, etc.
We will also properly appoint personnel to match the quantity and quality of our business operations byimproving our present business processing.

32

Profile of NEXI
Annual Report FY2005

Profile of NEXI

Date of
Establishment

April 1st, 2001

Governing Law

The Law concerning the general rules of independent administrative institutions
The Trade and Investment Insurance Law

Business Aim

To perform insurance business efficiently and effectively by underwriting those risks occurring throughinternational business activities that cannot be covered by ordinary insurances.

Competent
Minister

The Minister of Economy, Trade and Industry

Capital
Number of Fulltime Employees
Scope ofBusiness

From the left, Yukio Kitazume (Vice Chairman), Hidehiro Konno (Chairman and CEO),and Naoki Obayashi (Vice Chairman)

Members of the Board and the Audit Board
Chairman and CEO Hidehiro Konno

Brief History¥104,352,324,369 (Fully contributed by the Japanese Government) (Unchanged from the previous year)
155 (As of March 31, 2006)
1. To perform trade and investment insurance business according to Chapter 3 of the Trade and Investment Insurance Law.
2. To perform any business accompanied by the above.
3. To accept reinsurance of the insurance commitment of international institutions, foreign governments
and foreign corporations that perform insurance business, including reinsurance of undertaking losses
covered by trade and investment insurance and corresponding losses.
4. To cede NEXI’s insurance commitment under the Trade and Investment Insurance Law, to the Japanese government as the other party of the reinsurance contract according to Chapter 4 of the Tradeand Investment Insurance Law. In addition, to cede NEXI’s insurance commitments to contracted parties such as international institutions, foreign governments and foreign corporations, including the reinsurance of undertaking losses covered by trade and investment insurance.
July, 1999
December, 1999

Vice Chairman Naoki Obayashi
Vice Chairman Yukio Kitazume

April, 2001

Corporate Auditor (Full Time) Katsuo Oki

Corporate Auditor (Part Time) Takashi Imai
Katsuo Oki(Corporate Auditor)

Takashi Imai
(Corporate Auditor)

Offices

Main Insurance
Products

The Law concerning the general rules of Independent Administrative Institutions was approved.
The Law to partly amend the Trade and Investment Insurance Law was approved.
The independent administrative institution, Nippon
Export and Investment Insurance was established.

(For reference)
March, 1950 The Trade and Investment Insurance Law was approved
Thereafter, trade and investment insurance
has been managed by the Ministry of Economy, Trade and Industry (formerly the Ministry of International Trade and Industry).

Head Office

Chiyoda First Building, East Wing 3F, 3-8-1, Nishi-Kanda,
Chiyoda-ku, Tokyo 101-8359
Tel. 81-(0)3-3512-7650
Fax. 81-(0)3-3512-7660

NEXI, Osaka

3-1-22, Kitahama, Chuo-ku, Osaka City,
Osaka 541-0041
Tel. 81-(0)6-6233-4017
Fax. 81-(0)6-6233-4001

Export Credit Insurance
Buyer’s Credit Insurance
Trade Insurance for Manufacturers
Export Credit Insurance for SMEs
Intellectual Property License Insurance
Overseas Untied Loan Insurance
Overseas Investment Insurance
Export Bill Insurance
Prepayment Import Insurance

URL

33

h ttp ://w w w.n e x i .g o .j p

34

NEXI Customer Service Charter
Annual Report FY2005

NEXI Customer Service Charter

NEXI Spirit(1) Our mission is to assist customers to conduct
international business with a sense of security by
reducing incidental business risks.
To this end, we take time to grasp the customer’s
viewpoint, so that we can meet our customer’s needs
precisely and we can provide efficient and high-quality
services, thereby enhancing customer satisfaction andestablishing mutual trust.
(2) By implementing our customer-focused policy, we willcontinue to:
1. Improve the quality of services,
2. Broaden the range of risk coverage,
3. Promote the efficiency of operations, and
4. Increase the transparency of management.

NEXI Pledges to the Customer
We are committed to:(1) Providing insurance products that will make customers
feel secure and protected in overseas transactions(2) Readily providing information and advice to customers
on their transactions from a preliminary stage(3) Responding promptly to the inquiries and concerns ofcustomers(4) Meeting the demands of customers and business needs(5) Speedily completing claim assessments and promptly
making claim payments(6) Speedily allocating recovered money(1) Providing insurance products that will make customers
feel secure and protected in overseas transactions
1) If you suspect that your international transactions,
including exports, foreign investment and overseas
lending may incur any risk, please visit our website(http://www.nexi.go.jp) and find the insurance productsection, or contact the following offices.

(3) Responding promptly to the inquiries and concerns ofcustomers
1) If you have any questions about insurance products,
please call or e-mail the Customer Relations Office or any
relevant group. We will respond quickly.
2) To estimate an insurance premium, please use thepremium calculation simulator on our website.
If you give us information on your planned transaction,
the group in charge will estimate a premium on the same
day of the inquiry, in principle, or on the following
business day at the latest. (For medium or long-term nonL/G transactions, however, we will answer within fivebusiness days.)
If the group in charge finds it difficult to answer yourinquiry within these time limits, the group will promptly
notify you to that effect and give the reason for the delay
and the expected date of answer.
3) Should the group in charge find any inadequacy in theforms submitted, such as the pre-application form and theinsurance application form (other than environmentrelated forms), we will notify you within five business daysof our receipt at the latest.
4) If you have any questions about trade insurance
system for a specific project, please consult the group in
charge or the Customer Relations Office. We will answer
within five business days at the latest.
Should we find it difficult to answer within the statedperiod, you will be promptly notified to that effect and be
given the reason for the delay and the expected date ofanswer.

Customer Relations Office (Head Office):
Tel: 81-(0)3-3512-7712(4) Meeting the demands of customers and business needs

Customer Relations Office (NEXI, Osaka):
Tel: 81-(0)6-6233-4018

1) It would be appreciated if you could give us sufficientlead time when consulting with us as our assessment
may take longer than expected.

2) To provide customers with further information on our
insurance products that are beneficial to international
business, we are always pleased to dispatch our staff toyour office at your request. Please feel free to contact us.
(2) Readily providing information and advice to customers ontransactions from the preliminary stage.
If you plan to initiate international transactions, such asexports and overseas investment, there is a NEXI service
available for you.
We will be pleased to consult with you at an early stageof project formation and propose the most appropriate
insurance product to minimize any risk involved.

35

For enquiries, please see the NEXI directory as below, inorder to find out where to contact us.
Customer Relations Office (Head Office):
Tel: 81-(0)3-3512-7712
Fax: 81-(0)3-3512-7687
E-mail: okyakusama@nexi.go.jp
Customer Relations Office (NEXI, Osaka):
Tel: 81-(0)6-6233-4018
Fax: 81-(0)6-6233-4001

2) If it becomes necessary to accelerate procedures forsuch a reason as an export contract proceeding more
rapidly than anticipated, please consult with us. Yourbusiness needs are always important to us and we will doour utmost to meet accelerated deadlines.
If we find it difficult to meet an accelerated deadline, wewill immediately alert you of this and let you know how
long it will take to complete the necessary procedures.
(5) Speedily completing the assessment of a claim andpromptly making a claim payment
1) As soon as we receive an insurance claim from acustomer, we will assess the details in light of theinsurance policy provisions to determine the amount of
the claim to be paid. We will then make a payment withina stipulated time. This is generally within two months ofreceipt of the claim, however, in a situation where moretime is required for a survey, this rule does not apply. Foran application for insurance claims, customers arerequested to steadily execute the duty of notification andthe duty of loss prevention and reduction stipulated insuch documents as insurance policy provisions. In
addition, customers are also requested to submit allnecessary documents stipulated in the insurance policy
provisions and other regulations within a specified time.
2) In the event of any inadequacy being found in a
submitted claim or in other documents in light of
insurance policy provisions or other regulations, we will
give you notification no later than three business days
after receiving the documents.
3) In order to pay claims within the period stipulated in theinsurance policy provisions, and other regulations, weappreciate your understanding and cooperation, including
the early submission of documents necessary for theassessment.
(6) Speedily allocating recovered money
1) When money is recovered from a debt for which wehave been entrusted with the exercise of recovery rights,
we will promptly distribute the recovered money inaccordance with insurance policy provisions, etc.
2) To allocate money recovered according to Paris Clubdebt rescheduling or other programs, in principle, we willcomplete remittance procedures to the relevant customer
accounts by the business day following confirmation of
the receipt of the full amount in a NEXI account.

Information
Various kinds of information can be found on our website(http://www.nexi.go.jp) and in our annual report.
(1) Please visit our website for comprehensive information on
trade insurance, which we hope will be helpful.
NEXI website features:
1) Recent developments (including changes in systems
and underwriting policies and business results for the lasthalf-year period)2) Description of our insurance products
3) Rules concerning trade insurance (including insurance
policy provisions for all of our insurance products)
4) Underwriting policies
5) Country categories
6) Simulation of premium calculations

7) Application procedures
8) Procedures to be adopted after occurrence of an
insured event9) Examples of insurance claim payments cases10) Brochures on our insurance products11) Downloadable insurance policy provisions, detailed
rules concerning procedures, various application forms(2) Our annual report (in Japanese and English) offers theresults of our trade insurance business and our financial
statements.
Other publications are also available, including NEXI
corporate brochures and leaflets on our insurance
products. Please feel free to call the Public Relations
Group or the Customer Relations Office of the Head
Office.
(3) For inquiries regarding our website, annual report or any
other public relations material, please contact the Public
Relations Group of the Head Office.

Your Comments and Complaints
Enhancing customer satisfaction is our constant aim. If you
experience difficulty with any procedure or have a complaint
about our services, do not hesitate to tell us, then the
problem will be rapidly addressed.
(1) If you let us know about any trouble you may be having,
we can do whatever is necessary to solve the problem. In
such a case, for example in insurance-related
procedures, please give us the details of the problem andwhat you wish to be done. We will immediately analyze
the situation to discover the source of the problem andsuggest a solution.
(2) If you have any complaint about our services or thehandling of a specific project, please inform the Customer
Relations Office.
1) For any complaint about our services, please provide
the details to the Customer Relations Office in writing or
via e-mail. After examining your problem, the Customer
Relations Office will let you know how it will be dealt with.
In a situation where it is difficult for us to take immediate
action, we will let you know the reason for the difficulty
and how we intend to proceed with it.
2) If there is any complaint about the handling of a
specific project, please provide the details to theCustomer Relations Office in writing or via e-mail.
After re-examining the details, the Customer Relations
Officer will inform you of the results of our investigation
without delay.
If action cannot be taken immediately, the Customer
Relations Officer will inform you of the reason and the
projected schedule for completion.

36

NEXI Customer Service Charter
Annual Report FY2005

Customer Relations Office(1) We have established a “Customer Relations Office” toprovide more efficient services for our customers inaccordance with our customer-oriented policy.
Customer Relations Office (Head Office):
Tel: 81-(0)3-3512-7712
Fax: 81-(0)3-3512-7687
E-mail: okyakusama@nexi.go.jp
Customer Relations Office (NEXI, Osaka):
Tel: 81-(0)6-6233-4018
Fax: 81-(0)6-6233-4001(2) The Customer Relations Office offers customer support
by viewing the situation from the customer’s viewpoint.
Any question or inquiry is welcome, including questions
about trade finance, the appropriate group to handle aplanned project, and the handling of a specific project.
We will take prompt action in these matters.

About This Customer Service Charter
It is our policy that NEXI staff members act quickly at all
times, and the Charter will be constantly reviewed. Please
do not hesitate to make any comments about this Charter or
NEXI in general.

NEXI Directory■ For general inquiries, including questions about theoutline of trade insurance, please contact:
Customer Relations Office (Head Office):
Tel: 81-(0)3-3512-7712
Fax: 81-(0)3-3512-7687
E-mail: okyakusama@nexi.go.jp
Head Office - Underwriting Group No.1
Tel: 81-(0)3-3512-7667
NEXI, Osaka - Customer Relations OfficeTel: 81-(0)6-6233-4018
Fax: 81-(0)6-6233-4001■ For inquiries about matters ranging from consultation
on trade insurance underwriting to assessment
associated with specific transactions, (including termsof cover, country categories, international agreements
and insurance application procedures, such as buyer
registration), please contact:

Short-Term Transactions(Terms of Less Than Two Years)
Head Office - Underwriting Group No.2
(Tel: 81-(0)3-3512-7668)• Consultation, individual assessment and issuance of

37

informal approval of transactions for Export Credit
Insurance, Export Bond Insurance and Prepayment
Import Insurance that do not fulfill the insurance
requirements by country such as for amount limits
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)• Consultation and individual assessment oftransactions for all kinds of insurance fulfilling theinsurance requirements by country such as foramount limits• Consultation and individual assessment of insurance
claims for Export Bill Insurance
NEXI, Osaka - Administration Group(Tel: 81-(0)6-6233-4017)• Consultation, individual assessment, and issuance of
informal approval of transactions for Export Credit
Insurance (for transactions less than billions of yen)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)• Consultation and individual assessment oftransactions for Export Credit Insurance (SpecificInsurance, Comprehensive Insurance with Exporters’
Association, Comprehensive Insurance) fulfilling theinsurance requirements by country such as foramount limits• Consultation and individual assessment oftransactions for Trade Insurance for Manufacturers• Consultation and individual assessment of Export
Credit Insurance for SMEs
• Consultation and individual assessment of insurance
claims for Export Bill Insurance

Medium & Long-Term Transactions(Terms of Two Years or More)
Head Office - Underwriting Group No.2
(Tel: 81-(0)3-3512-7668)• Consultation, individual assessment and issuance of
informal approval of transactions for Export Credit
Insurance, Buyer’s Credit Insurance, Export Bond
Insurance and Prepayment Import Insurance• Consultation on underwriting and assessment
regarding transactions with direct government loansor government guarantees, or a transaction without
government guarantees for which insurance cover isrequested only for political risks.
• Consultation, individual assessment and issuance of
informal approval of transactions for Overseas
Investment Insurance
Head Office - Structured and Trade Finance Insurance
Department
For inquiries about Export Credit Insurance without L/Gand Overseas Untied Loan Insurance

Project Team No.2
(Tel: 81-(0)3-3512-7675)• Consultation on underwriting and assessment withregard to transactions concerning power generation,mining and aircraft (Asia and Russia)
Project Team No.3
(Tel: 81-(0)3-3512-7672)• Consultation on underwriting and assessment withregard to oil and gas transactions (Europe, Russia
and Latin America)
Project Team No.4
(Tel: 81-(0)3-3512-7601)• Consultation on underwriting and assessment withregard to oil and gas transactions (Asia, Africa andMiddle East)
Project Team No.5
(Tel: 81-(0)3-3512-7674)• Consultation on underwriting and assessment withregard to transactions concerning infrastructure andmanufacturing (including steel industry)

For inquiries about the following, please contact
the appropriate office.
■ Ratings for, and credit management of, non-Japanesetrading companies and banks:
Head Office - Credit Administration Group(Tel: 81-(0)3-3512-7684)
NEXI, Osaka - Administration Group(Tel: 81-(0)6-6233-4017)■ Insurance application forms:
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Issue of insurance policies
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Collection or refund of insurance premiums
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Acceptance and handling of applications for alteration
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Various application procedures, including approvalof pledge
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Various types of notification, such as notification ofredemption date
Head Office - Business Administration Group(Tel: 81-(0)3-3512-7664)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Notice of occurrence of risks, notification of losses
and credit advice
Head Office - Claims Service & Recovery Group(Tel: 81-(0)3-3512-7663)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ Claims and assessment of insured events
Head Office - Claims Service & Recovery Group(Tel: 81-(0)3-3512-7663)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ For inquiries about Paris Club rescheduling,
allocation of recoveries and so forth
Head Office - Recovery Services Group(Tel: 81- (0)3-3512-7725)■ For inquiries about assessments of recoverable
assets other than the above and recovery
business in general
Head Office - Asset Planning Group(Tel: 81-(0)3-3512-7658)
NEXI, Osaka - Underwriting Group(Tel: 81-(0)6-6233-4018)■ “Guidelines on Environmental and Social
Considerations in Trade Insurance”
Head Office - Environment Group(Tel: 81-(0)3-3512-7685)■ Information
Head Office - Administration Group(Tel: 81-(0)3-3512-7656)■ Public relations, including the NEXI website andannual report
Head Office - Public Relations Group(Tel: 81-(0)3-3512-7655)

Project Team No.1
(Tel: 81-(0)3-3512-7673)• Consultation on underwriting and assessment withregard to transactions concerning power generationand mining (Europe, Middle East, Africa and Latin
America)38

Implementation of Confirming Environmental
and Social Considerations
Annual Report FY2005

Implementation of Confirming Environmental
and Social Considerations

Nippon Export and Investment Insurance (NEXI) confirms whether appropriate
environmental and social considerations are being addressed in projects that may becovered by NEXI’s insurance, in accordance with the “Guidelines on Environmental andSocial Considerations in Trade Insurance” (established on April 1, 2001).
NEXI conducts the screening of projects based on screening forms submitted by insurance
applicants. The projects are classified into three categories A, B, and C in descending orderof level of impact. NEXI examines environmental impact on the projects based on theclassification results. For example, an on-site visit is conducted for “Category A” projects.

Quantity of Screening Conducted
The quantity of screening conducted in FY2005
increased about 20% over the previous year.

Quantity of Screening
in FY2005 by Region

Category C accounts for around 80% of all
the projects, since cover is provided for manysmall-scale projects such as maintenanceprojects.

The Middle East, Asia, and Latin America
account for around 85% of all the projects.

A

6.8%

B

Central/Eastern
Europe, Russia,
CIS

15.6%

The Middle
East

15.4%

99

FY2004

Please click the following URL for details of the“Environmental and Social Consideration in Trade
Insurance”.
http://nexi.go.jp/e/env/index1_frame.html

Quantity of Screening
in FY2005 by Category

117

FY2005On-site Visit

34.6%

Latin America

0

39

19.2%

103

FY2003

20

40

60

80
100
120
(Quantity of screening)

C

77.8%

Asia

30.6%

40

Nippon Export and Investment
Insurance Organization Chart

AuditorChairman and CEO
Vice Chairman

Vice Chairman

Examiner(special assignments)• Environmental and Social Consideration
Guideline in Trade Insurance

Secretariat

Planning and Administration
Department

Asset Management
Department

Underwriting
Department

Structured and Trade FinanceInsurance Department

Financial Risk Management
Department

NEXI, Osaka

81-(0)3-3512-7651
81-(0)3-3512-7669

81-(0)3-3512-7658
81-(0)3-3512-7676

81-(0)3-3512-7661
81-(0)3-3512-7679
81-(0)3-3512-7687

81-(0)3-3512-7670
81-(0)3-3512-7688

81-(0)3-3512-7680
81-(0)3-3512-7689

81(0)6-6233-4017
81(0)6-6233-4001

General Management Group81-(0)3-3512-7653· Total management· Communications with the Ministry of

Economy, Trade and Industry and theinstitutions concerned· Planning to improve the insurance
system· Correspondence to International
standards such as the OECD
guidelines

Strategic Planning Group81-(0)3-3512-7654· Planning of medium-and long-term

management strategy

Administration Group81-(0)3-3512-7656· Human resource and welfare

management· Documentation management

Accounting Group81-(0)3-3512-7657· Accounting service· Fund management

Treasury Group81-(0)3-3512-7659· Receipts and disbursement ofdeposit and securities and record
keeping· Recording of balance of capital

System Office
81-(0)3-3512-7715· Promoting and controlling theAsset Planning Group81-(0)3-3512-7658· Planning of overall strategy for

claims assessment, recovery, andrecoverable asset management

Claims Service &Recovery Group81-(0)3-3512-7663

81-(0)3-3512-7665· Planning of sales strategies· Re-insurance with Export Credit

Customer Relations Office0120-672-094
81-(0)3-3512-7712

Recovery Services Group

Business Promotion Group· Management of recoverable

assets, and planning andallocation of recovered claims.

requests about insurance services· Assessment of underwriting andMiddle East, Africa and Latin
America)· Operation of the insurance systemclaim

including underwriting conditions or
policy, premium rates and so on

Environment Group81-(0)3-3512-7675

based on the Guidelines on
Environmental and Social
Consideration in Trade Insurance· Correspondence to the OECD
meeting dealing with the issues onexport credits and the environment

Project Team No.3

· Sales Promotion

81-(0)3-3512-7672· Oil/gas (Europe, Russia, and Latin

America)

Underwriting Group No.1
0120-671-094
81-(0)3-3512-7667

Country Risk Analysis Group

Project Team No.4

Trade insurance for manufacturers,
Export Bill Insurance, Prepayment
Import Insurance, Export Bond
Insurance· Management of special
agreements in Comprehensive
Insurancebusiness strategy at the branch· Duties relating to Export Credit

insurance· Duties relating to Export Bill

Insurance

Customer Relations Office

NEXI, Singapore
c/o JETRO
16 Raffles Quay #37-02A,
Hong Leong Bldg.
Singapore 048581
65-6429-9582
65-6220-7242
Cover area: Asia and Oceania

0120-649-818
81-(0)6-6233-4018

requests about insurance services· Investigation,analysis andevaluation of country risk
· Correspondence to the OECD
Export Credit Group Meeting
concerning country risk evaluation· Oil/gas (Asia, Middle East, andAfrica)Project Team No.5
81-(0)3-3512-7674

Credit Administration Group· Infrastructure and81-(0)3-3512-7684

manufacturing (including steel
industry)

Underwriting Group No.2

NEXI, New Yorkc/o JETRO
1221 Avenue of the Americas,
42 FI, McGraw-Hill Bldg.
New York N.Y.10020 USA
1-212-819-7769
1-212-819-7796
Cover area: North, Central, andSouth America

Underwriting Group· Handling customer inquiries and81-(0)3-3512-7686

81-(0)3-3512-7601· Sale of Export Credit Insurance,

management of overseas buyers
and banks· Total management at the branch· Planning and implementation of· Environmental and social reviews· Aircraft· Duties relating to credit exposure

81-(0)6-6233-4018

81-(0)3-3512-7685· Power generation, mining (Asia andRussia)81-(0)3-3512-7714

81-(0)6-6233-4017

81-(0)3-3512-7683

Project Team No.2

· Handling customer inquiries and

NEXI, Parisc/o JETRO
166, rue de Rivoli,
75001 Paris France
33-(0)1-4261-5879
33-(0)1-4261-5049
Cover area: Europe, Central Asia,
Middle East and Africa

Administration Group81-(0)3-3512-7673· Power generation, mining (Europe,· Planning of loss prevention· Assessment of insurance claims· Recovery of insurance claims paid

81-(0)3-3512-7725

Credit Analysis andControl Group

Project Team No.1

Agencies· Overseas matters· The front branch office of theExport Credit Insurance in thewestern part of Japan· Underwriting Overseas Untied
Loan Insurance and Export
Credit Insurance (over 2 years
transaction without L/G)

Business Planning Group

Overseas Offices· Planning management of credit

control to overseas buyer and bank81-(0)3-3512-7668· Rating and granting credit limit of· Underwriting of specific Export

overseas buyer and bank
· Analysis of creditworthiness ofoverseas buyer and bank

Credit transactions (under 2 years)· Underwriting of Export Credit

transactions with L/G (over 2 years)· Underwriting of Overseas
Investment Insurance

informatization of NEXI

· Planning of the insurance information

system· Procurement and maintenance for the
insurance information system(hardware) and the local area network

Mizuho Bank
A2 ExitJimbocho Sta.

Jonan Credit
Association

Iwanami Hall

Comedie
Francaise

51st

52nd

M1

7th Ave.

McGraw-Hill Bldg.

Rue St-Honore
The Bank of TokyoMitsubishi UFJ
A3 ExitHotel duLouvrePlace duPalais Royal

M
R
T

Broadway
49th St. (N, R)

Metro No.1
Palais Royal
Musee du Louvre
entrancet.

41

Kudanshita Sta.

SenshuUniv.

Nihon Univ. (Law)

50th

50th St. (1, 9)

Rue Moliere
Avenue de l' OperaS
anduties relating to PR such as web
site management and issuance of
pamphlets· Sharing information and interaction
with other Export Credit Agencies· Administration of the overseas
representative offices

No.5
Exit

t.

· Correspondence to press andNishikanda
Ramp

JR Chuo Line

49th

Rue Richelieu

M7

Kandagawa River

Oohara Boki
SchoolKensu Gakkan

Sdai

81-(0)3-3512-7655

Starbucks
am/pm

NEXI NEXI

Sen

Public Relations GroupJR Suidobashi Sta.
West
Exit
Tokyo
Dental College
Hospitalus
Hak

to insurance

McDonald’s

ine

the insurance information system(software)· Administration of statistics relating

48th

Tokyo Dome
Sotobori St.

L
way
Sub

· Development and maintenance foralteration of standardtransactions (under 2
years)· Concluding of insurance
contracts and other officeprocedures related tounder 2 years nonstandard and over 2 years
transactions· Office procedures related
to notifications andapplicants before
occurrences of losses

litan
opo y
Metr resswa
Exp
No.5
ine
ay L
ubw
ai S
Toz

81-(0)3-3512-7715

81-(0)3-3512-7664· Underwriting anda
Mit

System Development &Statistics Group

Business Administration
Group

Cecil St.

NEXI Paris

Ave. of the Americas (6th Ave.)ay
Collyer Qu

AIA Tower

Rockefeller Center (B, D, F, Q)

Rue de Rivoli

Shinjuku Subway LineHong Leong Bldg.

Yasukuni St.

Rockefeller Center

Hanzomon Subway Line

Head Officeuay81-(0)3-3512-7677

Ra
ffle
sQ

System Administration Group

Musee du Louvre

NEXI, Paris

NEXI, New YorkNEXI, Singapore

Chiyoda First Building, 3-8-1 Nishikanda, Chiyoda-ku,
Tokyo 101-8359, Japan
Tel: 81-(0)3-3512-7650 Fax: 81-(0)3-3512-766042