Insurance of loans related to investment is suitable if you invest in a foreign country, and a part of the investment is paid from a bank credit. The insured in this case is the bank of the Slovak exporter and through the insurance the financing bank gets the certainty that it will not lose its money and therefore it introduces many more conditions for obtaining credit.
|Procedure at insurance|
|1.||Foreign investment and application for credit|
|You consider an investment abroad. For the investment, you need financing from the bank, so you ask the bank for a credit.|
|2.||Insurance of credit relating to an investment|
|Your bank wants an insurance against the risk of credit repayment default and asks EXIMBANKA SR for insurance. After application assessment and thorough analysis of the capital export territory and all participating parties of the capital export territory, the return on the investment project as well as investor´s creditworthiness and experience, the insurance contract is signed.|
|After the insurance premium payment, the insurance contract becomes effective. In the case of insurance claim, EXIMBANKA SR provides the insurance benefits.|
When is such insurance most advantageous?
The insurance is suitable primarily with larger financial volumes and longer-term investments, with which financing from a bank is necessary.
What is the period of the insurance?
The period of the insurance is derived from the length of the loan and this is usually long-term, or exceeds a period of 3 years.
What are the basic conditions of the insurance?
• The investment must represent a long-term obligation of an investor for a period longer than 3 years
• Profits of the investor are dependent only on the outputs of the foreign company and on the revenues from the investment
• The investment must be in conformity with the existing legal order of the host state and the investor and foreign company have obtained the necessary permits from administrative authorities of the host state
• The investment must be partially financed from own resources, namely minimally 15% of the value of the investment. The requirement on the amount of own resources comes from the character of the individual project.
• The financing bank shares in the risk of non-payment of the credit minimally in the amount of:
o 2.5 % in the case of political risks;
o 5% in the case of commercial risks.
And what about impact on the environment and the social impact of the case?
EXIMBANKA SR respects its international obligations. For this reason with projects with a maturity of the loan longer than 2 years we assess their impact on the environment and the observing of human rights in the communities affected by the project. Evaluation begins with the submitting by the exporter of a filled in questionnaire which is an appendix to the insurance application. After determining the importance of the impact of the export on the environment, we assign your project to one of three categories (A, B, C) and on the basis of this we decide whether the export will be assessed by a professional appraisal of the impact of the export on the environment.
What kind of risks does the insurance cover?
The insurance is focused on non-marketable risks, i.e. those which commercial banks and insurance companies are unwilling or incapable of insuring. The insurance covers:
• political risks – risk of non-payment of a receivable for political and administrative accidental or hard to foresee events in the country of the buyer, such as, e.g. war or other armed conflict, terrorism, unrest, strikes, revolutions, nationalization, embargo, the impossibility of transfer, discrimination measures of a government and others. Natural disasters, such as floods or earthquakes, are also included here.
• commercial risks – the risk of non-payment of a receivable, especially for reason of insolvency, or unwillingness to pay by the debtor.
How much will it cost?
The amount of the premium rate depends on several factors, such as the country of the investment, the duration of the investment, the method of securing the investment and the like. The premium rate is assessed for each project individually.
How is the insurance paid for?
The insured (the bank) pays the premium in one payment in advance. By payment of the premium the insurance policy acquires force.