Companies turning to Trade Credit Insurance in an unpredictable and debt-laden world

Size: px
Start display at page:

Download "Companies turning to Trade Credit Insurance in an unpredictable and debt-laden world"

Transcription

1 Companies turning to Trade Credit Insurance in an unpredictable and debt-laden world

2 Companies turning to Trade Credit Insurance in an unpredictable and debt-laden world On the heels of a period of financial uncertainty, many businesses are looking at alternatives for managing and mitigating the credit risks associated with their customer portfolios. The failure of a major customer, or several smaller customers, to pay can severely impact the financial health of an organization and, in the most severe cases, even put a company into bankruptcy. However, several methods may help mitigate trade credit risk. Some of the more common tactics include using letters of credit, factoring, self-insurance in the form of bad debt reserves, and purchasing trade credit insurance. Each has advantages and disadvantages, and organizations should assess their particular situation to determine what approach is most suitable for their needs. What many will find is that trade credit insurance provides one of the best and most cost-effective solutions, especially when expanding globally. What many will find is that trade credit insurance provides one of the best and most cost-effective solution, especially when expanding globally. U.S. businesses are increasingly looking outside the United States for growth and profitability. Often these opportunities are lucrative, but not without risk. This became even more apparent during the recent economic downturn. The global nature of the Great Recession resulted in an increase in business failures worldwide. In 2008 for example, the U.S. alone experienced a 33 percent increase in year-over-year bankruptcy filings and then another 34 percent increase in The importance of protecting accounts receivable from bankruptcy, protracted default and political risks, not only for new customers but also existing ones were some of the major lessons learned from the recession. Understanding this is particularly important for businesses when entering new global markets. Historically, the United States has not been a sizeable market for trade credit insurance products. Since the U.S. is a large country, equivalent in size to all of Europe, with common laws, language and currency, many businesses perceived domestic expansion as relatively easy and risk free. On the other hand, in Europe, a continent of many countries with different laws, languages, and pre-euro, different currencies, growth almost always meant selling outside one s home country, where the risks of doing business are multiplied. Many believe it is this reason that trade credit insurance is a much more mature industry in Europe than in the United States. For example, some estimate that Europe alone accounts for nearly half of the $8 billion worldwide trade credit insurance marketplace. While the market for trade credit insurance is a growing market in the United States, the increased risks associated with cross-border transactions significantly increase the demand for such products. 1 United States Courts, Bankruptcy Filings Down in Fiscal Year 2011 (November 2011) Bankruptcy_Filings_Down_in_Fiscal_Year_2011. aspx In recent years the United States trade credit insurance market has experienced a substantial increase in demand for trade credit insurance. This is evidenced by the estimates received by the global insurance brokers that there was nearly $700 million in annual premiums generated in 2012 for the short term trade credit business with another approximately $150 million for medium term structured trade credit business. This estimate does not include premium and fee figures from the Export-Import Bank of the United States (Eximbank), the official Export Credit Agency of the United States. Eximbank plays a critical role in the trade credit insurance market. Their mandate is to offer coverage to underserved markets, such as small businesses or companies selling into higher risk countries, where the private sector insurers do not have the appetite or capacity to cover. While premium and fee income figures are not readily available, Eximbank s insured exposure has increased substantially over the past five years. For instance, in 2008 Eximbank had $14 billion in exposure which increased to approximately $35 billion in Eximbank Annual Report 2008 and

3 Some believe the increase is due to the globalization of the world economy, while others attribute it to the impact of the recession still being fresh in the minds of many businesses. Whatever the reason, U.S. businesses are looking for ways to mitigate trade credit risk. What is trade credit insurance? U.S. exports to emerging markets have gained momentum over the past decade. Foreign trade will continue to be responsible for a surge in U.S. company revenues as companies will seek growth from emerging markets to offset soft demand from industrialized nations. However, as with any growth opportunity there is potential for increased risk. The risk of exporting is amplified when the laws, customs, communications and reputations of customers, or potential customers, are not fully understood. 3 Open account terms of payment are typical in the United States and are becoming more common for international sales as well. Historically, domestic U.S. companies would require letters of credit, cash in advance or other secured terms for international transactions. While this is beneficial to the US exporter, as virtually all credit risk had been eliminated, trading under secured terms has the potential to put a company at a competitive disadvantage since their competitors, namely European competitors, often offer open account terms. Obtaining open account terms from a supplier is basic working capital management since open account purchase is akin to an interest free short term loan. While the benefits seem one-sided, since the buyer gets the product, holds title and is not required to pay for a period of 60 to 90 days, the fact is that many suppliers or would be suppliers are not in a position to change this status quo given the competitive landscape. Trade receivables often account for up to 40 percent or more of a company s total assets and are many times one of the largest assets on the balance sheet. They are also the only assets with a direct correlation to the income statement. Trade credit insurance is a risk management product designed to indemnify companies for trade receivable losses due to commercial risks such as insolvency (i.e., bankruptcy) and protracted default, which is the failure of a company to pay within six months of the due date. If a company is trading internationally, trade credit insurance also covers the political risks associated with a sale such as currency inconvertibility, war and civil disturbance as well as confiscation, nationalization and expropriation of a buyer. There are several types of trade credit insurance programs. The size and scope of a business will determine what program is most suitable. The types of trade credit insurance policies include: Whole-turnover Policy There is no selectivity available for this type of policy and the insured is required to cover their entire portfolio of customers. The only flexibility offered is the ability to choose to insure all domestic sales, all export sales or both. There are two types of underwriting philosophies when underwriting a whole turnover account: 3 Peter M. Jones, The World Bank, Trade Credit Insurance (February 2010) siteresources.worldbank.org/ FINANCIALSECTOR/Resources/Primer15_ TradeCreditInsurance_Final.pdf - Excess-of-loss or non-cancellable underwriting philosophy Designed for larger companies that have an established credit risk management department and are looking for protection against unexpected and catastrophic losses. Buyer and country limits are non-cancellable and these policies are typically structured with a moderate to large first loss deductible. 3

4 - Ground Up or cancellable philosophy The underwriter makes all credit decisions for the organization usually designed for the SME segment of the market and for companies who do not employ a full time credit management team. These insurers almost act as an outsource of the credit management department. When taking all of the costs and fees associated with letters of credit, trade credit insurance becomes a much more inexpensive and streamlined alternative. Key Account Policy This type of policy is designed for companies who are not interested in insuring their entire portfolio, but only top or key accounts. Under a Key Account policy the underwriter names each buyer, with an approved credit limit, to the policy by endorsement. The insured can choose the buyers where coverage is requested, as long as there is a suitable spread of risk and, more importantly, there is not an adverse selection of risk. A typical Key Account policy would be structured to cover the top 5, 10 or 20 of the insured s largest exposures. A policy can also be structured with a coverage floor where the insured is required to cover all buyers with credit exposures in excess of a pre-determined amount, i.e. $500,000, $1,000,000, etc. or greater. Single Buyer Policy Offers coverage on account and is typically reserved for an insured which has a disproportionate amount of exposure with one account vis-à-vis the rest of their customer portfolio. Under this type of policy underwriters will typically require the risk to be a large, established entity with audited financial statements. Top Up Policy The insured approaches a secondary carrier to provide coverage excess of the primary buyer limits issued by a primary insurance carrier. What are the alternatives? Insurance is not the only strategy for mitigating trade credit risks. It was common practice to look to the capital markets for trade receivable protection when large amounts were at stake, in particular, credit default swaps, however, these instruments are only available to offset the risk of publically traded companies and are typically much more expensive than trade credit insurance coverage. Other alternatives include, letters of credit, factoring and self-insurance in the form of bad debt reserves. Letters of Credit Letters of credit are used in international transactions to guarantee a supplier that the buyer s payment obligations will be received on time and in the correct amount. If payment is not received, the confirming bank will cover the obligation. Letters of credit differ from insurance as it is the responsibility of the buyer, not the supplier, to request it from the bank. This may cause liquidity issues for the buyer as letters of credit reduce the amount of availability under a company s credit facility. For example, if a company has a $10 million line of credit and is required to post a $2 million letter of credit, the company now only has $8 million available to draw. This is one of the reasons buyers prefer not to open letters of credit in favor of their suppliers as it has the potential to reduce their working capital availability. Letters of credit also only provide coverage for a single transaction with a single buyer. Keeping track of each individual transaction can create logistical and paperwork issues for suppliers and buyers alike. When taking all of the costs and fees associated with letters of credit, trade credit insurance becomes a much more inexpensive and streamlined alternative. 4

5 Factoring Factoring refers to the selling of accounts receivable to financial institutions, known as factors. The factor purchases a percentage of the face value of a trade receivable. Many factors will also offer ancillary services such as debt collection, invoicing, credit information and other bookkeeping activities. While factoring offers these services and the benefit of immediate cash in exchange for a portion of the receivables, it is usually more expensive than insurance. Self-insurance Some companies choose to self-insure by creating bad-debt reserves to cover losses due to the default of outstanding receivables. While this approach eliminates the cost of having to rely on a third party for trade receivable protection, there is no standard practice of setting this reserve. Some companies use a percentage of sales, other use past loss experience, while others calculate it as a percentage of overall receivables. The shortcomings of relying on a bad debt reserve are that it typically does not account for the large and unexpected catastrophic loss. For example, assume a company with $100 million in sales creates a bad debt reserve of $350,000 and their fifteen largest customers have credit exposures ranging from $500,000 to $10,000,000. If one of these larger customers is unable to pay, the $350,000 bad debt reserve may be a fraction of the overall loss. By purchasing a trade credit insurance policy the company can more accurately budget and forecast premium costs versus bad debt losses. The benefits of trade credit insurance While there are many benefits of a trade credit insurance policy, there are three main motivations behind the purchasing decision: Increase sales By offering customers and prospects more favorable credit terms, companies may trade in confidence by safely expanding into new markets all while eliminating the need for costly letters of credit. Enhance borrowing power By including foreign receivables and excess concentrations back into their borrowing base, and by assigning a trade credit insurance policy to a financial institution, the insured may be able to negotiate better terms and conditions on their loan since the accounts receivable are now insured. Mitigate financial risk Receivables are typically the largest asset on a company s balance sheet and usually the only one not insured. It is also the one asset which has a direct correlation to the income statement. By insuring receivables against the risk of non-payment, the insured is mitigating what may be a devastating financial situation in the future. 5

6 Other benefits include: Information Purchasing trade credit insurance provides the insured access to the insurer s knowledge, expertise and advice of buyers, markets and industries. Stability Trade credit insurance can help provide certainty and stability as premium costs can be accurately budgeted and accounted for versus relying on an arbitrary bad debt reserve. Trade credit insurance also helps reduce earnings volatility since the risk of non-payment is mitigated. Conclusion Due to an unpredictable economy and stagnation in much of the industrialized countries, companies are now seeking out opportunities in areas like the Middle East, Western Africa and points across the globe. Trade credit insurance is a tool which may help mitigate the risk of conducting business both domestically and internationally. While trade credit insurance is a relatively newer concept in the United States, the demand is strong and the market is flourishing. The globalization of the United States economy as well as the recent economic and political crisis over the past four years have all led to increased awareness of the risks inherent in global trade and the tools which can help mitigate these risks. A A (06/13) The information in this article was compiled from sources believed to be reliable for informational purposes only. Any and all information contained herein is not intended to constitute legal advice and accordingly, you should consult with your own attorneys when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this article. Nothing herein should be construed as a solicitation, offer, advice, recommendation or any other service with regard to any type of insurance product underwritten by the local individual member companies of Zurich in North America, including Zurich American Insurance Group. Zurich 1400 American Lane, Schaumburg, Illinois Zurich American Insurance Corporation

Receivables insurance Protection against the biggest unidentified exposure facing Canadian business

Receivables insurance Protection against the biggest unidentified exposure facing Canadian business Receivables insurance Protection against the biggest unidentified exposure facing Canadian business Presentation to: Alberta Trade Contractors Coalition By: Ian Miller Receivables Insurance Association

More information

Managing Trade Risk and Business Credit Insurance. Association of Independent Corrugated Converters

Managing Trade Risk and Business Credit Insurance. Association of Independent Corrugated Converters Managing Trade Risk and Business Credit Insurance Association of Independent Corrugated Converters Sept 11, 2009 "Capitalism without failure is like religion without sin it just doesn t work. Adam Smith,

More information

A Guide to Credit Insurance

A Guide to Credit Insurance Introduction...page 1 Options for Mitigating Credit Risk...page 2 A Guide to Credit Insurance from Euler Hermes What is Credit Insurance?...page 3 The Basis of Credit Insurance...page 5 Conclusion...page

More information

Helping businesses manage risks and opportunities. Since 1893. Accounts Receivable Management Solutions from Euler Hermes ACI

Helping businesses manage risks and opportunities. Since 1893. Accounts Receivable Management Solutions from Euler Hermes ACI Helping businesses manage risks and opportunities. Since 1893. Accounts Receivable Management Solutions from About Commercial Credit Protection Trade Finance Enhancement Buyer Risk Assessment & Monitoring

More information

An Overview of Trade Credit Insurance. Author: Joe Ketzner Executive Vice President, Commercial Euler Hermes

An Overview of Trade Credit Insurance. Author: Joe Ketzner Executive Vice President, Commercial Euler Hermes An Overview of Trade Credit Insurance Author: Joe Ketzner Executive Vice President, Commercial Euler Hermes Table of Contents Introduction...3 More about Trade Credit Insurance...4 Philosophy of Trade

More information

AIG TRADE CREDIT INSURANCE Protecting Your Accounts Receivables Your Most Valuable Asset

AIG TRADE CREDIT INSURANCE Protecting Your Accounts Receivables Your Most Valuable Asset A AIG TRADE CREDIT INSURANCE Protecting Your Accounts Receivables Your Most Valuable Asset The Need for Credit Insurance Sales is the journey; cash is the destination. AIG Trade Credit helps companies

More information

Atradius Presents: Financing and Business Insurance Part 2: Introduction to Credit Insurance. Brett Halsey President

Atradius Presents: Financing and Business Insurance Part 2: Introduction to Credit Insurance. Brett Halsey President Atradius Presents: Financing and Business Insurance Part 2: Brett Halsey President Introduction to Credit Insurance Atradius Presents Introduction to Credit Insurance What is Credit Insurance? Definition

More information

Directors & Officers dedicated worldwide protection. A guide to Zurich s Side A policy

Directors & Officers dedicated worldwide protection. A guide to Zurich s Side A policy Directors & Officers dedicated worldwide protection A guide to Zurich s Side A policy Global insurance protection for your corporate leaders Corporate leaders have increasingly become targets of regulatory

More information

MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE

MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE Export Forum 2015 October 14, 2015 MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE Presented by: George Babeu, President One Source Risk Management and Funding, Inc. WHAT WE WILL DISCUSS Today s volatile

More information

Trade Credit Insurance: A Strategic Tool In Times of Economic Instability & Uncertainty

Trade Credit Insurance: A Strategic Tool In Times of Economic Instability & Uncertainty Trade Credit Insurance: A Strategic Tool In Times of Economic Instability & Uncertainty David Dienesch Euler Hermes Canada Andrew Leonard Marsh Canada Limited ECONOMIC UPDATE Uncertain economic environment

More information

Aon Risk Solutions. Aon Trade Credit. Unlocking the Value of Trade Credit Insurance

Aon Risk Solutions. Aon Trade Credit. Unlocking the Value of Trade Credit Insurance Aon Risk Solutions Aon Trade Credit Unlocking the Value of Trade Credit Insurance Trade Credit and the Global Economy If your business crosses borders, consider these questions: Do you regularly sell to

More information

Trade Credit Insurance An invaluable aid to successful Domestic and International Business

Trade Credit Insurance An invaluable aid to successful Domestic and International Business Trade Credit Insurance An invaluable aid to successful Domestic and International Business Presented by Business Credit Solutions, Inc. Facilitating Business to Business Commerce Worldwide Jerry Glickman,

More information

Counterparty Risk Mitigation Strategies for Commodity Merchants

Counterparty Risk Mitigation Strategies for Commodity Merchants Counterparty Risk Mitigation Strategies for Commodity Merchants By Alice Birnbaum As many clients of the BBH Commodities & Logistics group are well aware, recent consolidation among commodity consumers

More information

Accounts Receivable Management Solutions

Accounts Receivable Management Solutions Accounts Receivable Management Solutions from Accounts Receivable Management Solutions from www.eulerhermes.us Is one of your largest assets unprotected? There is a greater chance that a business will

More information

Trade Credit Insurance Bad Debt Protection

Trade Credit Insurance Bad Debt Protection Bad Debt Protection What is? > Coverage provided to companies who sell products to other businesses (b2b) on short-term credit (30/60/90 days) for both domestic and export sales > Indemnification for bad

More information

SBA EXPORT LOAN PROGRAMS

SBA EXPORT LOAN PROGRAMS SBA EXPORT LOAN PROGRAMS Patrick Hayes, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 600 Superior Avenue, Suite 700 Cleveland, OH 44114-216-522-4731 patrick.hayes@sba.gov SBA

More information

ENERGY INDUSTRY INSURANCE SOLUTIONS

ENERGY INDUSTRY INSURANCE SOLUTIONS Summer 11 ENERGY INDUSTRY INSURANCE SOLUTIONS ELECTRICITY PRICE & FORCED POWER OUTAGE COVERAGE WEATHER DERIVATIVES SYSTEM PERFORMANCE INSURANCE TRADE CREDIT INSURANCE ACCOUNTS RECEIVABLE PUTS NON CANCELLABLE

More information

Your Partner in International Trade, Investment & Structured Finance. Aon Trade Credit Asia

Your Partner in International Trade, Investment & Structured Finance. Aon Trade Credit Asia Your Partner in International Trade, Investment & Structured Finance The ever-changing financial and political landscape makes it impossible to predict the future. Our culture encourages us to aggressively

More information

Customer Service & Communications Conference. Credit Insurance Overview. Jay Rose Euler Hermes

Customer Service & Communications Conference. Credit Insurance Overview. Jay Rose Euler Hermes Customer Service & Communications Conference Credit Insurance Overview Jay Rose Euler Hermes Euler Hermes North America 119 years of experience, with a AA- S&P Rating and an A+ rating from AM Best Headquartered

More information

How to protect, inform & grow your business with trade credit insurance

How to protect, inform & grow your business with trade credit insurance Aon Risk Solutions How to protect, inform & grow your business with trade credit insurance Risk. Reinsurance. Human Resources. 2 How to protect, inform & grow your business with trade credit insurance

More information

RISK FACTORS AND RISK MANAGEMENT

RISK FACTORS AND RISK MANAGEMENT Bangkok Bank Public Company Limited 044 RISK FACTORS AND RISK MANAGEMENT Bangkok Bank recognizes that effective risk management is fundamental to good banking practice. Accordingly, the Bank has established

More information

MANAGING TRADING RISKS THROUGH THE ECONOMIC RECOVERY

MANAGING TRADING RISKS THROUGH THE ECONOMIC RECOVERY Trade Credit Practice, UK MANAGING TRADING RISKS THROUGH THE ECONOMIC RECOVERY OCTOBER 2013 CONTENTS The trading landscape for UK based companies... 1 Payment default and bad debt... 2 Insurance benefits...

More information

Trade Credit Insurance

Trade Credit Insurance Trade Credit Insurance credit insurance What it is:... An insurance coverage that protects the business against the risk of non-payment or protracted default of products or services. Coverage can be contracted

More information

from Chubb Are you ready to unleash

from Chubb Are you ready to unleash Trade Credit Insurance from Chubb Are you ready to unleash thepowerof your accounts receivable? Extending credit to a customer is serious business. Once a sale is made, accounts receivable yield no further

More information

BEGINNERS GUIDE TO YOUR GUIDE TO CREDIT INSURANCE

BEGINNERS GUIDE TO YOUR GUIDE TO CREDIT INSURANCE BEGINNERS GUIDE TO YOUR GUIDE TO CREDIT INSURANCE CONTENTS Chapter 1 The Basics 2 What is Credit Insurance? Why is Credit Insurance so Important? Who is Credit Insurance Suitable For? Chapter 2 Benefits

More information

Is Account Receivables Your Largest Asset? Unleash the Hidden Values A/R Insurance Can Deliver to Your Company. Presented by Glenn Robins

Is Account Receivables Your Largest Asset? Unleash the Hidden Values A/R Insurance Can Deliver to Your Company. Presented by Glenn Robins Is Account Receivables Your Largest Asset? Unleash the Hidden Values A/R Insurance Can Deliver to Your Company Presented by Glenn Robins US Companies Profile On Insuring Assets Compare Balance Sheet Assets

More information

A case for bundled claim management

A case for bundled claim management A case for bundled claim management A case for bundled claim management A decision concerning claim services can be a complex one for risk managers. The two key considerations cost and quality of service

More information

C&I LOAN EVALUATION UNDERWRITING GUIDELINES. A Whitepaper

C&I LOAN EVALUATION UNDERWRITING GUIDELINES. A Whitepaper C&I LOAN EVALUATION & UNDERWRITING A Whitepaper C&I Lending Commercial and Industrial, or C&I Lending, has long been a cornerstone product for many successful banking institutions. Also known as working

More information

Assessing your customers credit worthiness

Assessing your customers credit worthiness Assessing your customers credit worthiness Mike Buggy Risk Underwriting F4G event 19th November 2014 Department / author 1 Bad Debt and Insolvency Matters... 40% of a Company s assets are typically in

More information

W WALDORF GROWTH PARTNERS

W WALDORF GROWTH PARTNERS ALDORF GROTH PARTNERS S U S TA I N I N G G R O T H THROUGH A C C O U N T S R E C E I V A B L E INSURANCE. hat Is Accounts Receivable Insurance? Accounts Receivable Insurance protects a company s accounts

More information

Trade Credit Insurance Explained

Trade Credit Insurance Explained Trade Credit Insurance Explained How Trade Credit Insurance from Atradius Can Accelerate Your Business Growth Reduce risk, protect your cash flow and help grow your business with credit insurance. Introduction

More information

In a business climate that is volatile and uncertain, we at Coface know that trading safely and successfully is uppermost in your mind.

In a business climate that is volatile and uncertain, we at Coface know that trading safely and successfully is uppermost in your mind. Credit Insurance solutions Enabling companies to develop in a safer environment Credit Insurance solutions to protect your trading risks In a business climate that is volatile and uncertain, we at Coface

More information

Trade Credit Insurance

Trade Credit Insurance Trade Credit Insurance Protecting your bad debts 保 障 您 的 坏 账 风 险 TRADE CREDIT INSURANCE - PROTECTING YOUR BAD DEBTS THE ENVIRONMENT TODAY We are in a precarious situation. We face a confluence of sovereign

More information

Captive Strategies: Enhancing Value and Ensuring Compliance

Captive Strategies: Enhancing Value and Ensuring Compliance Captive Strategies: Enhancing Value and Ensuring Compliance The Benefits of Diversification and the Need for Compliance Owners of captive insurance entities recognize the value that a captive can bring

More information

for Analysing Listed Private Equity Companies

for Analysing Listed Private Equity Companies 8 Steps for Analysing Listed Private Equity Companies Important Notice This document is for information only and does not constitute a recommendation or solicitation to subscribe or purchase any products.

More information

Fund Activities. Trade finance is critical for supporting global trade flows, which totalled around US$18 trillion in 2011

Fund Activities. Trade finance is critical for supporting global trade flows, which totalled around US$18 trillion in 2011 Fund Activities Trade finance is critical for supporting global trade flows, which totalled around US$18 trillion in 2011 Fund Objective The Oxhill Trade Finance Fund s objective is to achieve stated specific

More information

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES Minaxi Rani Assistant Professor (Extn.), Department of Commerce, Govt. College for women P.G. College, Hisar, Haryana, (India) ABSTRACT

More information

Proposed Revisions to the Regulatory Framework for Trade Credit Insurance, Political Risk Insurance and Mortgage Insurance

Proposed Revisions to the Regulatory Framework for Trade Credit Insurance, Political Risk Insurance and Mortgage Insurance CONSULTATION PAPER P011-2010 July 2010 Proposed Revisions to the Regulatory Framework for Trade Credit Insurance, Political Risk Insurance and Mortgage Insurance PUBLIC CONSULTATION ON THE PROPOSED REVISIONS

More information

Export Import Bank Financing Programs

Export Import Bank Financing Programs Export Import Bank Financing Programs The Export Import Bank of the United States (Ex Im Bank) is the official export credit agency of the United States. Ex Im Bank assists in financing the export of U.S.

More information

Credit Risk Insurance. We protect Africa s Trade & Investments

Credit Risk Insurance. We protect Africa s Trade & Investments Credit Risk Insurance We protect Africa s Trade & Investments About ATI What is Credit Insurance? Benefits of Credit Insurance Export Credit Insurance Our Partners & Credit Rating ATI s Relationship with

More information

High Yield Bonds A Primer

High Yield Bonds A Primer High Yield Bonds A Primer With our extensive history in the Canadian credit market dating back to the Income Trust period, our portfolio managers believe that there is considerable merit in including select

More information

Trade Credit Insurance. Availability and Practice Within the Region

Trade Credit Insurance. Availability and Practice Within the Region Trade Credit Insurance Availability and Practice Within the Region Presented by Alan J Wallace Joint Managing Director IRC Europe Agenda A Brief History of Trade Credit Insurance Current Global Underwriting

More information

BANKING UNIT POLICY DOCUMENTS

BANKING UNIT POLICY DOCUMENTS BANKING UNIT POLICY DOCUMENTS POLICY DOCUMENT ON THE REGULATORY PROVISIONS FOR THE UNDERTAKING OF LENDING ACTIVITIES BY INSTITUTIONS AUTHORISED UNDER THE FINANCIAL INSTITUTIONS ACT 1994 FACTORING FORFAITING

More information

PROJECT FUNDING AND EXPORT FINANCE. EXPORT-IMPORT BANK of

PROJECT FUNDING AND EXPORT FINANCE. EXPORT-IMPORT BANK of PROJECT FUNDING AND EXPORT FINANCE EXPORT-IMPORT BANK of the UNITED STATES Agenda Who is US Exim-Bank Pre-Export Financing Post-Export Financing Recent success Cases in Colombia Who is the US Eximbank

More information

WELCOME! Introduction. Celebrating. &PrimeRevenue. PrimeRevenue Hong Kong. 2012 PrimeRevenue, Inc.

WELCOME! Introduction. Celebrating. &PrimeRevenue. PrimeRevenue Hong Kong. 2012 PrimeRevenue, Inc. WELCOME! Introduction Celebrating Ethe Factor Network establishment of &PrimeRevenue PrimeRevenue Hong Kong 2012 PrimeRevenue, Inc. Global Reach Today, we transact business in 50 countries Our platform

More information

Better control through captives. Efficient management of corporate risks and customized employee benefits

Better control through captives. Efficient management of corporate risks and customized employee benefits Better control through captives Efficient management of corporate risks and customized employee benefits Efficient management of corporate risks and customized employee benefits The use of captives to

More information

Supporting your foreign exchange needs. Search

Supporting your foreign exchange needs. Search Supporting your foreign exchange needs Understanding Foreign Exchange (FX) risk Trading internationally offers UK businesses the opportunity to buy and sell goods and services in a much larger marketplace.

More information

Insurance is an essential element in the operation of sophisticated national economies throughout the world today.

Insurance is an essential element in the operation of sophisticated national economies throughout the world today. THE ROLE OF INSURANCE INTERMEDIARIES Introduction The importance of insurance in modern economies is unquestioned and has been recognized for centuries. Insurance is practically a necessity to business

More information

Presentation to the KZN Exporter Week

Presentation to the KZN Exporter Week Presentation to the KZN Exporter Week Chris Thirion Stakeholder Management & Marketing 17 November 2014 ECIC Environment Self-sustained state-owned public entity registered as a Schedule 3 (b) business

More information

Thoughts on Self-Insurance

Thoughts on Self-Insurance Thoughts on Self-Insurance Managing Risk Isn t a Matter of Avoiding It But How Best to Handle It In the Most Economical, Sensible Way As part of its overall risk management program, a contractor must determine

More information

Common Commercial Finance Challenges. That Can Be Solved More Easily Than You Think

Common Commercial Finance Challenges. That Can Be Solved More Easily Than You Think Common Commercial Finance Challenges That Can Be Solved More Easily Than You Think Common Commercial Finance Challenges That Can Be Solved More Easily Than You Think Is your business experiencing any of

More information

I Benefits of MSI Credit Insurance

I Benefits of MSI Credit Insurance Credit Insurance of Mitsui Sumitomo Insurance I Benefits of MSI Credit Insurance Payment condition is usually a critical key for international trade competition. Advance Payment or Letters of Credit (L/C)

More information

Claims Paying Ability / Financial Strength Rating Methodology for Insurance Companies

Claims Paying Ability / Financial Strength Rating Methodology for Insurance Companies Claims Paying Ability / Financial Strength Rating Methodology for Insurance Companies CRAF s Claims Paying Ability (CPA) / Financial Strength Rating (FSR) is an opinion on an insurance company s financial

More information

Insurance protection for employees abroad

Insurance protection for employees abroad Insurance protection for employees abroad Insurance protection for employees abroad The recent political upheaval in the Middle East and the unprecedented catastrophe in Japan highlight the issues companies

More information

Appendix B. Risk Financing Considerations and Alternatives

Appendix B. Risk Financing Considerations and Alternatives Appendix B Risk Financing Considerations and Alternatives Appendix B Risk Financing Considerations and Alternatives A crucial part of managing a public entity s risks is deciding how to finance those

More information

The IRC 2015 Insurers Analysis: Annual Summary of 2014 Insurance Company Financial Statements

The IRC 2015 Insurers Analysis: Annual Summary of 2014 Insurance Company Financial Statements The IRC 2015 Insurers Analysis: Annual Summary of 2014 Insurance Company Financial Statements Prepared by IRC Security Committee June 2015 T a b l e o f C o n t e n t s Objective Purpose and scope of the

More information

Chapter 19. Financing International Trade. Lecture Outline

Chapter 19. Financing International Trade. Lecture Outline Chapter 19 Financing International Trade Lecture Outline Payment Methods for International Trade Prepayment Letters of Credit Drafts Consignment Open Account Trade Finance Methods Accounts Receivable Financing

More information

What we are seeing is sustained growth and increasing interest by corporates in adopting and enhancing a captive strategy.

What we are seeing is sustained growth and increasing interest by corporates in adopting and enhancing a captive strategy. 30 NATURAL RESOURCES MARKET REVIEW 2015 What we are seeing is sustained growth and increasing interest by corporates in adopting and enhancing a captive strategy. NATURAL RESOURCES MARKET REVIEW 2015 31

More information

A negotiable instrument, akin to cash, which evidences a payment obligation to be met, on presentation, at designated dates.

A negotiable instrument, akin to cash, which evidences a payment obligation to be met, on presentation, at designated dates. GLOSSARY Australian dollar Long-Term Debt Portfolio The majority of the Long-Term Debt Portfolio consists of the domestic debt component known as the Australian dollar Long-Term Debt Portfolio. It consists

More information

Financial Support for Exports. Export-Import Bank of the United States

Financial Support for Exports. Export-Import Bank of the United States Financial Support for Exports Export-Import Bank of the United States Who We Are Mission To create and sustain jobs by increasing U.S. export sales Official Export Credit Agency (ECA) of the U.S. Government

More information

Trade Finance and Payment Terms

Trade Finance and Payment Terms Trade Finance and Payment Terms June 22, 2010 11:00 am EDT You should be able to listen to this presentation through the speakers of your computer. A copy of the slides of this presentation will be available

More information

EXPORTER S SOUK EVENT FOUR SEASONS 4/23/2015 1

EXPORTER S SOUK EVENT FOUR SEASONS 4/23/2015 1 EXPORTER S SOUK EVENT FOUR SEASONS 4/23/2015 1 FACTORING Factoring is a financial transaction whereby a company sells its receivables to a Third Party (Factoring Company) at a discounted rate. Not a loan

More information

Corporate Risk Management Advisory Services FX and interest rate solutions for clients

Corporate Risk Management Advisory Services FX and interest rate solutions for clients Corporate Risk Management Advisory Services FX and interest rate solutions for clients Risk Management: The UBS Warburg approach UBS Warburg has built an outstanding reputation in the management of foreign

More information

ONEBEACON REPORTS $11.13 BOOK VALUE PER SHARE

ONEBEACON REPORTS $11.13 BOOK VALUE PER SHARE NEWS RELEASE For Immediate Release Investor Relations Media Contact: Paul McDonough Carmen Duarte Phone: 952.852.6020 781.332.7268 Email: ir@onebeacon.com cduarte@onebeacon.com Website: www.onebeacon.com

More information

Factoring as an Alternative Trade Finance Instrument in a Competitive World

Factoring as an Alternative Trade Finance Instrument in a Competitive World Factoring as an Alternative Trade Finance Instrument in a Competitive World 22 November2013 Peter Brinsley Director, POINT FORWARD LTD Peter Brinsley - credentials 21 years in factoring Now a freelance

More information

SITPRO. International Trade Guides. Management. Managing the Risks of International Trade

SITPRO. International Trade Guides. Management. Managing the Risks of International Trade SITPRO International Trade Guides Management Managing the Risks of International Trade Managing the Risks of International Trade This guide provides information that will help you to put procedures in

More information

1. Whatis Export Credit Insurance? 2. Structured Trade Credit Solutions for the Value Chain. 4. Benefits to Exporters

1. Whatis Export Credit Insurance? 2. Structured Trade Credit Solutions for the Value Chain. 4. Benefits to Exporters Export credit risk solutions Re-defining the way exporters trade successfully 1. Whatis Export Credit Insurance? 2. Structured Trade Credit Solutions for the Value Chain 3. Products & Services available

More information

ICTF's Global Credit Professionals Symposium April 20, 2015

ICTF's Global Credit Professionals Symposium April 20, 2015 The ICTF Best Practices and Ideas Exchange Forum: Export Credit Risk Mitigation Alternatives and Trade Finance Solutions Addressing the Needs of International Companies ICTF's Global Credit Professionals

More information

Arranging insurance backed trade finance structures

Arranging insurance backed trade finance structures Arranging insurance backed trade finance structures London Countertrade Roundtable Ian Henderson 21 March 2012 Current environment Economic environment Bank liquidity: Fewer global players active in trade

More information

Discounting. Factoring & Forfeiting Summary

Discounting. Factoring & Forfeiting Summary Chapter 7 Discounting. Factoring & Forfeiting Summary The financial service sector is developing at rapid pace in India. This is just because of the emerging needs of the economy. Many innovative schemes

More information

salesinvoices@leaseinvestment.com www.leaseinvestment.com Tel: +44871 237 4770 Fax: +44701 423 7002

salesinvoices@leaseinvestment.com www.leaseinvestment.com Tel: +44871 237 4770 Fax: +44701 423 7002 INVOICE DISCOUNTING, FACTORING & SALES LEDGER MANAGEMENT Selling your sales Invoices or outsourcing your sales ledger is one of the most complex techniques for business finance. Unfortunately, it is often

More information

FINANCIAL INFORMATION CONSOLIDATED FINANCIAL STATEMENTS. Risk management

FINANCIAL INFORMATION CONSOLIDATED FINANCIAL STATEMENTS. Risk management 167 Risk management Group risk management Group Risk Management supports the Board of Directors, the Executive Committee and the management teams of the Group companies in their strategic decisions. Group

More information

Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010

Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010 Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010 Contents Independent Auditors' Report 2 Financial Statements Balance Sheet 3 Statement of Operations and Unappropriated

More information

Online Executive Certificate in International Credit & Trade Finance

Online Executive Certificate in International Credit & Trade Finance International Credit & Trade Finance Truly Global Focus. Truly Global Delivery. Thunderbird Online s facilitated online professional development programs provide you with a comprehensive education in core

More information

Managing Foreign Exchange Risk

Managing Foreign Exchange Risk WHITE PAPER Managing Foreign Exchange Risk The Canadian dollar has made the headlines on numerous occasions in recent years. Its value has changed significantly and rapidly many times, greatly impacting

More information

Investment in Life Settlements: Certainty in Uncertain Times

Investment in Life Settlements: Certainty in Uncertain Times Investment in Life Settlements: Certainty in Uncertain Times November 30, 2010 by J. Mark Goode Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent

More information

Navigating the complexities and risks of doing business abroad

Navigating the complexities and risks of doing business abroad Navigating the complexities and risks of doing business abroad Navigating the complexities and risks of doing business abroad International commerce has become increasingly accessible in recent years,

More information

Manage Risk Worldwide

Manage Risk Worldwide Manage Risk Worldwide Zurich International Programs Corporate customers 2 At Zurich, we re proud of our ability to help protect businesses that operate internationally. For nearly 40 years, we have built

More information

FINANCING EXPORTS. Sandro Murtas Small Business Administration Office of International Trade Regional Manager sandro.murtas@sba.gov Tel: 504-756-5353

FINANCING EXPORTS. Sandro Murtas Small Business Administration Office of International Trade Regional Manager sandro.murtas@sba.gov Tel: 504-756-5353 FINANCING EXPORTS Sandro Murtas Small Business Administration Office of International Trade Regional Manager sandro.murtas@sba.gov Tel: 504-756-5353 Separating Myths from Facts Myth Small Businesses Don

More information

Online Executive Certificate in International Credit & Trade Finance

Online Executive Certificate in International Credit & Trade Finance International Credit & Trade Finance Truly Global Focus. Truly Global Delivery. Thunderbird Online s facilitated online professional development programs provide you with a comprehensive education in core

More information

ABF PAN ASIA BOND INDEX FUND An ETF listed on the Stock Exchange of Hong Kong

ABF PAN ASIA BOND INDEX FUND An ETF listed on the Stock Exchange of Hong Kong Important Risk Disclosure for PAIF: ABF Pan Asia Bond Index Fund ( PAIF ) is an exchange traded bond fund which seeks to provide investment returns that corresponds closely to the total return of the Markit

More information

THE USE OF CONSTRUCTION BONDS IN THE USA FLANDERS INVESTMENT & TRADE MARKET SURVEY

THE USE OF CONSTRUCTION BONDS IN THE USA FLANDERS INVESTMENT & TRADE MARKET SURVEY THE USE OF CONSTRUCTION BONDS IN THE USA FLANDERS INVESTMENT & TRADE MARKET SURVEY In the United States, the use of construction bonds is common in construction projects. It is issued by an insurance company

More information

United States of America. Presentation of financial resources available to US investors in Afghanistan; Financial Tools

United States of America. Presentation of financial resources available to US investors in Afghanistan; Financial Tools United States of America Presentation of financial resources available to US investors in Afghanistan; Financial Tools Kabul, February 2007 Research categories for all countries Finance Categories 1. Equity

More information

Best Practices: B2B Small Business Accounts Receivable

Best Practices: B2B Small Business Accounts Receivable Best Practices: B2B Small Business Accounts Receivable Best Practices: B2B Small Business Accounts Receivable By Dan Drechsel For most business to business companies, their largest asset is also the most

More information

Markets, Investments, and Financial Management FIFTEENTH EDITION

Markets, Investments, and Financial Management FIFTEENTH EDITION INTRODUCTION TO FINANCE Markets, Investments, and Financial Management FIFTEENTH EDITION Ronald W. Melicher Professor of Finance University of Colorado at Boulder Edgar A. Norton Professor of Finance Illinois

More information

In 2002, then-u.s. Secretary of Defense Donald

In 2002, then-u.s. Secretary of Defense Donald Extending credit to customers has become risky business in today s scrap markets and not just when exporting. Credit reporting services, credit insurance, and other risk-management tools can help mitigate

More information

Chapter 16: Financial Risk Management

Chapter 16: Financial Risk Management Chapter 16: Financial Risk Management Introduction Overview of Financial Risk Management in Treasury Interest Rate Risk Foreign Exchange (FX) Risk Commodity Price Risk Managing Financial Risk The Benefits

More information

INSURANCE RATING METHODOLOGY

INSURANCE RATING METHODOLOGY INSURANCE RATING METHODOLOGY The primary function of PACRA is to evaluate the capacity and willingness of an entity / issuer to honor its financial obligations. Our ratings reflect an independent, professional

More information

Patrick M. Avitabile Managing Director Citibank, N.A. 111 Wall Street New York, New York 10005

Patrick M. Avitabile Managing Director Citibank, N.A. 111 Wall Street New York, New York 10005 SECURITIES LENDING AND INVESTOR PROTECTION CONCERNS: CASH COLLATERAL REINVESTMENT; BORROWER DEFAULT; LENDING AGENT COMPENSATION AND FEE SPLITS; AND PROXY VOTING Patrick M. Avitabile Managing Director Citibank,

More information

Credit Insurance Grain Programme Prepared by Rebecca Bishop and Prudence Chang

Credit Insurance Grain Programme Prepared by Rebecca Bishop and Prudence Chang National Credit Insurance (Brokers) Pty Ltd Partnering Euler Hermes (a member of Allianz Australia Insurance Ltd) Credit Insurance Grain Programme Prepared by Rebecca Bishop and Prudence Chang Euler Hermes

More information

Willis Group Holdings. February 2014 I Bank of America Merrill Lynch Insurance Conference

Willis Group Holdings. February 2014 I Bank of America Merrill Lynch Insurance Conference Willis Group Holdings February 2014 I Bank of America Merrill Lynch Insurance Conference Disclaimer Important disclosures regarding forward-looking statements These presentations contain certain forward-looking

More information

Capital Requirements Directive Pillar 3 Disclosure. Western Asset Management Company Limited December 2008

Capital Requirements Directive Pillar 3 Disclosure. Western Asset Management Company Limited December 2008 Capital Requirements Directive Pillar 3 Disclosure Western Asset Management Company Limited December 2008 Background Under the 2006 Capital Requirements Directive ( CRD ), a revised regulatory framework

More information

Introduction to Convertible Debentures

Introduction to Convertible Debentures Introduction to Convertible Debentures Intro to Convertible Debentures March, 2009 Convertible debentures are hybrid securities which offer advantages of both bonds and equities. Like ordinary bonds they

More information

SOUTHEAST EUROPE MORTGAGE FINANCE WORKING GROUP Sofia February 23, 2005

SOUTHEAST EUROPE MORTGAGE FINANCE WORKING GROUP Sofia February 23, 2005 SOUTHEAST EUROPE MORTGAGE FINANCE WORKING GROUP Sofia February 23, 2005 Who We Are Presentation Topics Credit Life Insurance Mortgaged Property Insurance Mortgage Insurance Who We Are The leading international

More information

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board Condensed Interim Consolidated Financial Statements of Canada Pension Plan Investment Board September 30, 2015 Condensed Interim Consolidated Balance Sheet As at September 30, 2015 As at September 30,

More information

Trade Finance Guide. A Quick Reference for U.S. Exporters

Trade Finance Guide. A Quick Reference for U.S. Exporters Trade Finance Guide A Quick Reference for U.S. Exporters Table of Contents Introduction...1 Chapter 1: Methods of Payment in International Trade... 3 Chapter 2: Cash-in-Advance... 5 Chapter 3: Letters

More information

As of July 1, 2013. Risk Management and Administration

As of July 1, 2013. Risk Management and Administration Risk Management Risk Control The ORIX Group allocates management resources by taking into account Group-wide risk preference based on management strategies and the strategy of individual business units.

More information

The International Certificate in Banking Risk and Regulation (ICBRR)

The International Certificate in Banking Risk and Regulation (ICBRR) The International Certificate in Banking Risk and Regulation (ICBRR) The ICBRR fosters financial risk awareness through thought leadership. To develop best practices in financial Risk Management, the authors

More information

Q4. How should institutions determine if they may exclude asset-based loans (ABL) from their definition of leveraged loans?

Q4. How should institutions determine if they may exclude asset-based loans (ABL) from their definition of leveraged loans? Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Office of the Comptroller of the Currency Frequently Asked Questions (FAQ) for Implementing March 2013 Interagency

More information

CONSULTATION PAPER P016-2006 October 2006. Proposed Regulatory Framework on Mortgage Insurance Business

CONSULTATION PAPER P016-2006 October 2006. Proposed Regulatory Framework on Mortgage Insurance Business CONSULTATION PAPER P016-2006 October 2006 Proposed Regulatory Framework on Mortgage Insurance Business PREFACE 1 Mortgage insurance protects residential mortgage lenders against losses on mortgage loans

More information