The management of the Official Export Credit Guarantee Scheme of the Federal Republic of Germany is delegated to a consortium consisting of Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft (PwC). These companies have been appointed and authorized to make and receive all declarations pertaining to export credit guarantees on behalf of the Federal Government.
An Interministerial Committee (IMC), composed of the Federal Ministry of Economic Affairs and Energy - lead function, the Federal Ministry of Finance, the Federal Foreign Office and the Federal Ministry for Economic Co-operation and Development, decides on basic issues of cover policy and the granting of guarantees.
Federal Export Credit Guarantees
Euler Hermes handles on behalf and for the account of the Federal Government short-term and medium/long-term export credit guarantees (supplier and buyer credit risk cover), whole turnover policies and pre-shipment risk cover. Euler Hermes acts as leading partner in this consortium, which explains why these guarantees are widely known as "Hermes Cover" in the business world.
Investment Guarantee Scheme
The Federal Republic of Germany may grant guarantees for eligible foreign direct investments of German entrepreneurs by protecting them against political risks. The budgetary responsibility for this guarantee scheme lies with the German government.
Export credit insurance protects companies from losses due to non-payment for political and commercial reasons. Political causes of loss can be, besides lack of hard currency in the buyer`s country, wars, civil unrest or a payment moratorium imposed by a government. Commercial causes of loss are payment default by the customer or e.g. his insolvency.
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SACE is the Italian export credit agency, 100% controlled by Italian Ministry of Economy and Finance. SACE Group offers a wide range of instruments for credit insurance, investment protection, the provision of sureties and financial guarantees for companies as well as for banks for their daily business in Italy and abroad.
Credit insurance is the reduction or transfer to third parties of the risks of insolvency. The insurance includes, from an economic-financial point of view, managing and funding the loan. The risks of construction are all factors capable of damaging a particular company or that she herself may be damaged.
SACE Group assists and financially supports companies and banks in planning and protecting their Overseas Investment, especially in countries with high growth potential. Products provided include:
- Overseas Investment Policy (Political Risk Insurance)
- Investment Financial Guarantee
- Internationalization Guarantee
- Surety Bonds
- Infrastructure and renewable energy
SACE also has a dedicated team through which it supports projects implemented in Italy in sectors of strategic importance for the Italian economy such as infrastructure and renewable energy (particularly wind and photovoltaic solar power). SACE is examining the feasibility of additional guarantees in the transport sector (railway networks, ports and airports), the energy sector (oil & gas pipelines, regasification plants and power transmission lines) and telecommunications (mainly investments aimed at bridging the digital divide).
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Nippon Export and Investment Insurance
Nippon Export and Investment Insurance (NEXI) is an incorporated administrative agency of the Japanese Government. It provides trade and investment insurance services to facilitate and enhance Japanese companies’ international business.
Policies cover up to 97.5% for political and 95% for commercial risks. The Government reinsures insurance agreement underwritten by NEXI and is bound by OECD consensus.
Since its establishment in 1950, the trade and insurance programme has been managed directly by the Government and has played a significant role in supporting expanding exports and the development of overseas activities of Japanese companies. All operations involved in the programme are conducted by NEXI, while the Government (Ministry of Economy, Trade and Industry: “METI”) remains in charge of overall planning and negotiation between countries, from the standpoint of Japanese trade policy as a whole.
Overseas Investment Insurance
This insurance covers losses suffered by a Japanese company with a subsidiary or a joint venture in a foreign country. The losses are incurred when the relevant subsidiary or the joint venture is forced to discontinue business due to war, terrorism, or force majeure, such as a natural disaster. The insurance also covers losses incurred when a Japanese company is unable to remit dividends to Japan due to prohibition of foreign currency exchange or suspension of remittance.
Investment and Loan Insurance for Natural Resources and Energy
This insurance covers risks linked to overseas resources development projects. Reflecting the project's risk profile, the insurance features lower premium rates and a wide range of risk coverage compared with the existing services. The insurance provides cover for senior loans, subordinated loans and investments.
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EXIAR - Export Insurance Company of Russia
Export Insurance Agency of Russia (EXIAR) was established in 2011, with a mission consisting in export support through insurance of export credits against commercial and political risks, as well as Russian investments abroad against political risks. EXIAR’s sole shareholder is Vnesheconombank.
In line with the international practices, EXIAR is aimed at developing financial instruments for export state support providing insurance for export creditsagainst commercial and political risks and covering political risks related toRussian investments abroad.
Strategic areas of activity:
- Insurance support for the export of Russian goods and services
- The development of a modern export financing system, secured by the Agency’s insurance coverage
- Insurance support of Russian investments abroad
- Support for export-oriented SMEs
The Agency provides the following types of insurance coverage:
- The insurance of export credit to cover against commercial and political risks
- The insurance of Russian investments abroad to cover against political risks (from 2013)
For each insurance transaction, the Agency can cover up to 95% of losses in the event of a political risk occurring, and up to 90% in the event of a commercial risk.
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UK Export Finance - Export Credits Guarantee Department
UK Export Finance is the operating name of the Export Credits Guarantee Department (ECGD), the United Kingdom's Export Credit Agency (ECA). It operates as a ministerial department of the Department for Business, Innovation and Skills, and reports to the Secretary of State for Business, Innovation and Skills.
ECGD's aim is to benefit the UK economy by helping exporters of UK goods and services to win business, and UK firms to invest overseas, by providing guarantees, insurance and reinsurance against loss, taking into account HM Government’s wider international policy agenda. ECGD is required by HM Government to operate on a slightly better than break-even basis, charging exporters premium at levels that match the perceived risks and costs in each case.
Overseas Investment Insurance
Overseas investment covers investors against losses on overseas investments arising from political risks.
The largest part of ECGD's activities involves underwriting long-term loans to support the sale of capital goods, principally for the export of aircraft, bridges, machinery and services: it helps UK companies take part in major overseas projects such as the construction of oil and gas pipelines and the upgrading of hospitals, airports and power stations.
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Export-Import Bank of the United States
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government and is self-sustaining. US ex-Im Bank was made an independent agency in the Executive branch by Congress, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers.
Among its authorities and limitations is the principle that Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal.
Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing).
- Medium and Long-Term Loan Guarantee
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Overseas Private Investment Corporation
The Overseas Private Investment Corporation (OPIC) is the U.S. government’s development finance institution. It mobilizes private capital to help solve critical development challenges and, in doing so, advances U.S. foreign policy, by encouraging development in regions that have experienced instability or conflict, yet offer promising growth opportunities, such as the Middle East and North Africa, Sub-Saharan Africa, and Southeast Asia. OPIC operates on a self-sustaining basis at no net cost to American taxpayers.
OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Political Risk Insurance
OPIC’s political risk insurance enables U.S. businesses to take advantage of commercially attractive opportunities in emerging markets, mitigating risk and helping them compete in a global marketplace. OPIC helps U.S. investors protect their investments in a variety of situations, including:
- War, civil strife, coups and other acts of politically-motivated violence including terrorism
- Expropriation, including abrogation, repudiation and/or impairment of contract and other improper host government interference
- Restrictions on the conversion and transfer of local-currency earnings
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