Trade Credit Risks

Protecting your business assets.

Political Risks and Bank Interests

NCI partners with Financial Institutions to support lending activities, with the aim of providing solutions for protection against defaults, non-payment and risks often out of lenders and insureds control.

Political Risk Insurance

NCI has the ability to offer specialised coverage such as protection against unexpected catastrophic political or macroeconomic events, particularly in developing economies.

In conjunction with banks and financiers, political risk insurance is used to support finance when there is a political risk concern or when country credit limit may be exceeded. NCI works with the both the Financial Institution and the potential client to find a solution for all stakeholder requirements.

Bank lenders are protected against defaults on cross-border loans and are covered for missed loan repayments due to:

  • Acts of confiscation, expropriation or nationalisation by the host government
  • Currency inconvertibility or exchange rate transfer restriction
  • Contract frustration due to war and other acts of political violence
  • Import or exports embargos

In cases of a loan to a government-owned entity or a loan which has a government guarantee, political risk policies cover scheduled payments against non-payment or non-honouring of government guarantees.

Protection against these types of risks gives confidence to the lender in knowing if unforeseen circumstances arise, protection is in place.

Structured Trade Credit Risk

Structured Trade Credit Insurance provides coverage to banks with exposure to trade-related financing instruments; LOCs, pre-export finance or general supply chain finance with exposures longer than 180 days. Insurance covers losses due to insolvency, protracted default, and political risk perils including export and license cancellation.

Through NCI’s Singapore operation we have access to the Lloyd’s syndicates as well as the private market insurers providing over $600M of capacity for any one risk. This is around half of the global capacity available and significant lines for Bank requirements.

Risk Participation Agreements

Risk Participation Agreements (RPA) are becoming increasingly more common. Traditionally a bank would share its exposure with another bank, however, banks are eligible to enter a RPA with an insurer assisting capital relief.

NCI’s Singapore office is uniquely positioned to negotiate these larger opportunities. Banks can often negotiate better terms with a panel of insurers, seeking better rates in difficult market conditions. One insurer does not provide effective market coverage. NCI’s ability to seek additional sources proves invaluable when placing large, specific risks.

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