Losses and claims
In addition to many smaller and medium-sized losses, SERV posted a large loss in Zambia in the year under review. The African country is heavily dependent on commodities and the fall in demand for copper in the wake of the COVID-19 crisis left Zambia insolvent to a degree.
It has so far been possible to avert many imminent losses due to the COVID-19 crisis in the year under review through prompt, active pre-loss management using measures such as restructuring due dates, extending cover and negotiating with the foreign buyers.
Losses
SERV made indemnity payments totalling CHF 82.7 million in the year under review, of which CHF 15.7 million related to payment for losses already recognised in previous years and CHF 67.0 million was newly reported losses. SERV was able to release CHF 4.6 million in provisions for imminent losses (IBNR = Incurred But Not Reported) and had to set aside CHF 111.9 million in provisions for reported losses. Value adjustments on claims changed by CHF 47.6 compared to the previous year, while SERV booked claims of CHF 11.8 million as definitive losses.
In the year under review, SERV processed 49 new losses in addition to the 176 existing losses in recovery. These new losses affected 36 countries. SERV realised CHF 11.9 million in recoveries as a result of implementing recovery measures. Of the CHF 82.7 million in disbursements for losses, CHF 26.8 million related to short-term risks in Cuba, CHF 20.3 million to risks in India and CHF 10.0 million to risks in Switzerland. The largest recovery of CHF 5.2 million and the highest write-off of unrecoverable claims of CHF 7.2 million related to a transaction in Spain. Claims from losses exceeded CHF 500 million for the very first time in 2020, rising by a total of CHF 50.1 million to CHF 501.3 million.
losses
+49
indemnity payments
in CHF million
82.7
Restructuring & Debt Rescheduling
The COVID-19 crisis has led to more than 100 countries applying to the International Monetary Fund (IMF) and the World Bank for assistance. On 14 April 2020, the official bilateral creditor countries of the G20, the Paris Club and some other creditor countries reached an international agreement on a Debt Service Suspension Initiative (DSSI) for the poorest countries. The Initiative allows these countries to use their financial resources to cover expenses related to the impact of the pandemic.
Of the countries with active debt rescheduling agreements with Switzerland, it is Cameroon, Pakistan, Honduras and Bangladesh that qualify for this DSSI. Cameroon and Pakistan have submitted a deferral request. The bilateral agreement for DSSIs with Pakistan was concluded in December 2020 (cf. Financial Report).
In October 2020, the IMF, the World Bank Group, the G20 member countries and the Paris Club agreed to extend the DSSI for another six months until mid-2021. This gave the affected countries a deferral for the repayments due in 2020 and until mid-2021, each with a one-year waiting period and a four- to five-year repayment period.
Argentina and Cuba, which do not qualify for DSSI but are nevertheless also severely affected by the impact of the COVID-19 pandemic, were also unable to meet their payment obligations in 2020. Renegotiations with these two countries are planned for the first half of 2021.
The other countries listed in the table “Credit Balances from Debt Rescheduling Agreements” (cf. Notes on the Financial Statements, p. 63) with which debt rescheduling agreements were concluded in the Paris Club met their payment obligations in the year under review.
There is currently only a purely bilateral restructuring agreement with North Korea. This expired at the end of 2019 and no follow-up arrangement has yet been agreed.