RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Trade Credit Insurance
Link to Product Website
Provider Name Zurich Emerging Markets Solutions - USA
Product Definition Trade Credit Insurance:

Dealing with a financial loss is a challenge. It's more challenging when that loss occurs in an emerging market. No matter what the reason for nonpayment---liquidation, bankruptcy, ongoing defaults, or political risks---it makes it difficult for your company to succeed in international credit risk management, and continue to sell to a broader overseas market.

Zurich can help you get your arms around these credit risks. We specialize in creative trade credit solutions for your company that are customized to the countries where your defaults occur. Our trade credit insurance contains no restrictions on customer nationality which means we can handle your trade risk needs anywhere in the world you are doing business. Zurich's underwriters average more than 10 years of experience in emerging markets, and work with 300 of the world's largest multinationals. So you have the backing of experienced professionals that can pinpoint the trade credit solution you need.

Solutions for Emerging Market Risks:

Zurich offers a trade credit solution tailored to the way business is conducted in developing economies and the payment default risks that go with it. Zurich provides trade credit insurance that covers exporters, commodity traders and the financial institutions that support them in the event of payment defaults caused by political risk events or company specific issues. Zurich's trade credit coverage is a welcome departure from traditional trade credit insurance, which focuses short-term and typically syndicates transactions. Zurich's trade credit insurance is designed specifically for the risks and issues associated with emerging markets.

Terms up to seven years give insureds the ability to offer extended or deferred payment terms, which are often essential to build relationships with emerging markets customers. Zurich also structures single-obligor policies, with capacity up to US $50 million per transaction – so each deal receives the attention and the protection it merits.

When it can enhance coverage terms, capacity or flexibility, Zurich collaborates with export credit agencies and multilateral institutions to optimize trade credit coverage for insureds.

Small Buyer Facility: Zurich's small buyer facility allows smaller lenders and exporters to take advantage of trade credit insurance covering a pool of identifiable risks. Each risk is attached as an endorsement to an existing policy and coverage is available to insureds that anticipate at least $10 million of risks annually. With a desired $1 million minimum for each risk, this facility is applicable to short-term receivables as well as medium-term trade financing.

Letters of Credit: In addition to directly insuring the payment obligations of buyers in emerging markets, Zurich also insures Letters of Credit issued in favor os such buyers by privately or publicly owned banks.

Trade Credit Insurance for Forfaiters:

Forfaiters and trade finance banks that offer forfaiting are enjoying significantly increased demand for their services today. Growing competition among exporters to the fast developing economies of Asia and other emerging markets has broadened the appeal of forfaiting as a financing arrangement because it allows exporters to manage their individual and aggregate credit exposures to emerging markets obligors.

The growing demand for forfaiting, however, has shifted to forfaiters a substantial amount of non-payment risk originally borne by exporters. Such payment default may be due to political risk or commercial reasons. In addition to the risk that a buyer may default, forfaiters also face the threat that a local bank in the emerging market that guaranteed the buyer's payment may also not meet its obligations.

As an experienced trade credit insurer, Zurich may help forfaiters manage these risks, as well as those of expropriation, political violence and currency inconvertibility, with insurance tailored to their needs. Zurich’s trade credit coverage can help indemnify the forfaiter up to 90 percent of the value of the transaction, providing insurance coverage in case of default due to political or commercial reasons. The benefits of Zurich’s trade credit insurance include:

- Flexibility
- Assignment of Coverage
- Reduction of Concentrations
- Risk-based capital management

For more information refer to the following link: http://www.zurichna.com/internet/zna/SiteCollectionDocuments/en/Products/tradecredit/TradeCreditInsuranceSolutionsforForfaitingCompanies.pdf

Product Type Political Risk Insurance
Defined Risks Covered Other Risks
More on Risks Covered
Eligible Form of Investments Equity
More on Eligible Investments
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions East Asia and Pacific
Eastern Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Sub-Saharan Africa
Eligible Applicants All
More on Eligible Applicants
Eligible Sector No Specific Sector
Maximum Tenor 5+ to 10 years
Max. Absolute Amount (USD) 0 to 50 MM
Max. % of Project Costs Covered 75+% to 100%
Max. % of Export Content Covered Max./under 50%
Fees Market-based

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: No
Environmental standards: No
Social standards (incl. Human Rights Standards; Labor Rights Standards): No
Source(s) n.a.
For more information, contact Gerald F. Haley
Email: gerald.haley@zurichna.com
Phone: 1 410 559 8723
Attachments Application for Trade Credit Insurance.pdf
Non-Binding Inquiry for Credit Insurance.pdf
Additional Links www.zurichna.com/internet/zna/SiteCol ... ceSolutionsforForfaitingCompanies.pdf
www.zurichna.com/internet/zna/SiteCol ... itInsuranceforexportersandbankers.pdf
Deals n.a.

Provider Name Zurich Emerging Markets Solutions - USA
Institution Type PRIVATE: Political Risk Insurer
Ownership Private
Head Office 1201 F Street, N.W., Suite 250, Washington, D.C. 20004
Provider Home Country United States
Rating n.a.
Main Risk Mitigation Products Political Risk Insurance
Trade Credit Insurance
Attachments Solutions for infrastructure developers and lenders.pdf
Additional Links
Entered On: 07/15/2008 at 02:09 PM
Updated On: 05/20/2013 at 02:09 PM