Reinsurance

a credit insurer assumes the overall risk Reinsurance is the most extensive form of co-operation between export credit agencies. The reinsurance contract can be designed either as a master agreement or as an individual agreement that is tailor-made for a specific transaction and the whole risk management is carried by one credit insurer. The insurer of the main supplier covers the entire order, on the condition that the ECA (reinsurer) of the subcontractor provides reinsurance cover.

Reinsurance is the adequate tool

if you are a principal supplier with a level of foreign content that exceeds the limits set by the Austrian government and thus cannot be covered under the guarantee. First, try to substitute Austrian sources for as much of the international component as possible. If this is not possible and the sub-supplied component includes a significant portion from a single foreign country, please contact us to find out if this portion can be reinsured with the respective national ECA. Is your project facing hurdles such as country or project limits set by your ECA? In this case as well, reinsurance is the ideal answer.

Prerequisites for a reinsurance

The customer awards the whole order to a single supplier (the main supplier) and the contractual relationship between main supplier and subcontractor gives the latter an unconditional right to payment, in other words, that the main supplier must pay the subcontractor regardless of whether the end-customer pays.

Exporter proceeds as follows

If the prerequisites for reinsurance are fulfilled, then the exporter files an application (form G1) for the total project value.

Financing of customer
The typical financing structure in reinsurance is the buyer credit ("tied financial credit). The credit institution that is providing the funding files a guarantee application for tied financial credits (form G3).

OeKB proceeds as follows

OeKB applies simultaneously for reinsurances to the corresponding ECAs of the subcontractors.

Essential elements of reinsurance

The main insurer handles the risk management, also for the subcontractors portion Definition of rights and obligations of the main insurer and reinsurer Definition of the reinsurance percentage

The main insurer decides in case of emergency, after having contacted the reinsurer, on its own about the measures to be undertaken.

The advantages of reinsurance

One single policy on the terms of the main insurer, with extensive harmonisation of terms between ECAs (with some limitations this also applies to the guarantee compensation) Insurance of the entire transaction on uniform terms Insurance and financing are each obtained from a single provider, thus facilitating overall financing and reducing the number of parties involved in the export transaction A single credit agreement for the buyer More flexible sourcing, coupled with cost savings Opportunity for small and medium-sized enterprises to participate in large projects and open up new markets.