Insurance Policies for Lenders
Protect your overseas assests, foreign investments, and international contracts against unforeseen political events or foreign government actions.
POLITICAL RISKS INSURANCE
Political risk insurance coverage is purchased by lenders who extend term loans, revolving credit lines, project finance, debt/equity investment, or other financing to borrowers or projects located in high risk foreign countries. These policies can also cover loans to Europe companies for their international operations. Payment defaults are covered if caused by expropriation, political violence, currency inconvertibility, or other government actions or political risks.
DEPRIVATION OF COLLATERAL COVERANGE
Financial institutions lending on the basis of assets located in other countries can obtain collateral deprivation insurance to protect against the inability to exercise their legal rights over their collateral following a default.
MEDIUM FINANCING POLICIES
International trade finance insurance is purchased by Europe lenders making loans and leases to companies in emerging foreign markets for the purpose of buying capital equipment from Europe exporters. Protection against all commercial and political non-payment risks, in some cases for up to 100% of the loan amount, can be structured with terms of up to five years.
LETTER OF CREDIT COVERAGE
When you are selling to a foreign government or public-sector buyer, contract frustration insurance (also known as contract repudiation insurance) protects against non-payment or arbitrary non-honoring of your contract, either before or after your shipment of goods or performance of services. Political risks insurance is also available to protect against non-honoring of sovereign government payment guarantees, whether the buyer is in the public or private sector. Other policies can be written to insure against the political risks of non-payment on sales to private-sector buyers, for example to cover your sales to your company’s own subsidiary located in a politically risky market.
BUYER CREDIT POLICY
A growing number of Europe lenders are providing revolving short-term financing overseas, particularly for individual large foreign companies that are purchasing from multiple Europe suppliers. These lenders can cover all commercial and political non-payment risks with short-term foreign buyer underwriting. While managing the concentration of risk associated with a single borrower, foreign buyer credit insurance also enables a lender to do business with all of the debtor’s Europe suppliers . . . some of whom may become new “relationship” prospects for the lender as well.
NOTE FOR ASSET-BASED LENDERS
Richard International does not provide any direct financing for Europe companies. The word “Finance” in our name refers to Richard International’s facilities for extending multi-year financing to equipment buyers located in other countries.
- When we offer export credit insurance to our Europe clients, they sometimes require financing for their short-term foreign receivables (and/or their domestic receivables, inventories, and other assets). We refer these exporters to local banks or other asset-based lenders. If you are interested in financing credit-insured foreign receivables, let us know your lending parameters and we would be pleased to refer prospects who fit your customer profile.
- All referrals to Richard International are handled in the strictest confidence and with the greatest respect of the relationships between referring lenders and their customers.
- Give Richard International a call if we can be of service to you or your customers, or feel free to have exporters contact us directly.
NON-DELIVERY BY FOREIGN SUPPLIER
Europe importers that purchase on cash-in-advance terms from suppliers located in high-risk foreign countries can protect against arbitrary contract frustration or non-delivery by a foreign public-sector supplier. This political risks insurance also covers non-delivery by a private-sector foreign supplier due to political events or government actions outside of its control. This coverage applies to losses relating to purchases made on cash-in-advance (pre-paid) terms, barters, tolling contracts, or similar arrangements (assuming no financial compensation in lieu of delivery). It also insures against political risks such as government-supported confiscation of products belonging to the insured party in the country of origin or in transit.