Trade Credit Insurance

Non-Payment Protection for Banks, Lenders & Investors

Financial institutions, specialty lenders and investors use trade credit insurance to protect international trade payment instruments, trade finance facilities, general corporate loans, and other financial assets against default on scheduled payments.

Financiers may purchase policies for their own account or choose to be nominated as a “loss payee” under a borrower’s policy.

Coverage typically offers 90% indemnity with repayment terms of up to seven years and maximum limit of liabilities as high as $150MM per insurer for any single risk.

Why do Financial Institutions and Lenders Buy Trade Credit Insurance?

Banks and specialty lenders have become one of the largest purchasers of Trade Credit Insurance coverage in recent years. The product’s broad applicability and flexible policy wordings offer benefits to financial institutions and lenders of all sizes. Advantages conferred by Trade Credit Insurance policies include, but are not limited to, the following:

  • Meet an individual financial institution’s standards for a qualified risk mitigant under Basel II/III

  • Maintain competitive advantage by holding assets on the books as opposed to selling assets or seeking a risk participation from another financial institution

  • Increase lending capabilities via management of internal individual obligor and / or country limit constraints

  • Expand a client’s borrowing base to include typically ineligible foreign accounts receivable under traditional asset-based lending facilities

What is Eligible for Coverage?

• Confirmed Letters of Credit

• Bankers Acceptances

• Trade Acceptances (drafts)

• Trade Loans (Bilateral and Syndications)

• Standby Letters of Credit

• Loans (bilateral and syndications)

• Diversified Payment Rights (DPRs) / Securitizations

• Import and Export Financing (Revolving Facilities or Individual Transactions)

• Pre-Export Financing

• Purchased Accounts Receivable

• Accounts Payable Financing

• Traditional Asset-Based Lending (insuring foreign accounts receivable otherwise excluded from the borrowing base)

• Working Capital Lines of Credit

• Standby Letter of Credit Issuance Facilities

• Accounts Receivable Securitizations