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Export Finance

Any company selling goods or services can benefit from using Comprehensive Credit or Political Risk Insurance to insure against losses arising from buyer default or insolvency and for export contracts, the frustration of a contract due to government actions/inactions or the occurrence of war, terrorism or political violence.

The ability to insure against the risk of non-payment or contract frustration can provide a company with a vital risk transfer mechanism to safeguard revenues and minimise losses thereby protecting capital and shareholder value. This class of insurance began with export credit agencies but since the 1970’s a private market has evolved to both compliment and compete with the ECA’s

Private market insurance can be purchased against the following risks:
  • Buyer non-payment
  • Non-payment by a guarantor or bank
  • Inability to exchange and remit funds from the buyers country
  • Failure of buyer to honour an arbitration award
  • Import or export licence cancellation
  • Imposition of import or export embargoes
  • Contract cancellation
  • Political violence (incorporating war and terrorism)
  • Fair/Unfair calling of contract bonds (bid, advance payment, performance and warranty)
Private Market vs Export Credit Agencies and Multinationals
Private market insurance can be used in conjunction with ECA/Multinational insurance or as an alternative. The advantages of private market insurance include:
  • The are no eligibility criteria such as foreign content or nationality
    of the insured
  • Superior policy contracts and scope of cover
  • Insurance can be arranged at any stage of a contract
  • Down payment structures can be insured
  • Responsiveness. Policies can be negotiated and finalised in
    very short timeframes
  • Flexibility to offer bespoke products
  • Premium rates are competitive
  • Contract bonds can be insured in isolation
Capacity of up to $1 billion per transaction is available for tenors up to +/- 15 years. A typical insurance contract would be for around $150m for tenors of 6 to 60 months.

Policies are non-cancellable by insurers except in the event of non-payment of premium. Indicative premium rates and heads of terms can be obtained quickly and free of charge

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