Private sector insurers that provide short-term export-credit insurance covering foreign receivables to U.S. exporters are now eligible for reinsurance from the Export-Import Bank of the United States (Ex-Im Bank).
Atradius Trade Credit Insurance Inc. is the first insurer to sign a reinsurance contract with Ex-Im Bank.
According to the U.S. government agency, the new product primarily will benefit U.S. small-business exporters that have had a more difficult time obtaining short-term export credit since the 2008-2009 financial crisis. Ex-Im Bank’s reinsurance mitigates risks for private insurers and enables them to expand their underwriting capacity for these credits.
“Small businesses are particularly dependent upon short-term insurance to export with confidence. Ex-Im Bank’s new product will enable insurers to continue providing coverage and help more U.S. small and mid-sized companies export to more countries and create more jobs in America,” Ex-Im Bank Chairman and President Fred P. Hochberg said.
Ex-Im Bank said its reinsurance will enable participating insurers to originate and underwrite transactions that otherwise would be outside of their portfolios due to their credit-limit caps on foreign countries and/or buyers perceived to be of higher risk.
Ex-Im Bank, an independent, self-sustaining federal-government agency, provides a variety of financing mechanisms including working capital guarantees to help small and medium-sized U.S. businesses, export-credit insurance to protect against nonpayment by foreign buyers, and loan guarantees and direct loans to assist foreign buyers of U.S. goods and services.
Ex-Im Banks said it authorized a record high $24.5 billion in loans, guarantees and insurance, including more than $5 billion in authorizations for small businesses in fiscal year 2010.
Was this article valuable?
Here are more articles you may enjoy.