Transactions under the responsibility of the Defense division are divided in two distinct categories: Pre-Shipment Insurance and Post-Shipment Insurance.

 

Pre-Shipment Insurance

Pre-Shipment Insurance transactions are evaluated for cover of Surety Bonds (Performance Bond, Bid Bonds e Advanced Payment Bond) on the basis of the applicable legislation: article 9° of Act n° 12.995 of 18 june 2014.

Said legislation allows for the use of funds from the Export Guarantee Fund (FGE) to cover guarantees provided by financial institutions against contractual obligation risks, in the form of performance guarantee, resource advance repayment guarantee and warranty terms and conditions for supply.

These guarantees may be posted in transactions of involving goods and services in the defense industry.

Thus, there is the exporter’s risk rating, according to the risk scales of the Independent Rating Risk Agencies, or our internal credit assessment scorecard methodology, associating to the exporter, a probability of no events schedule performance established by the commercial contract signed between the parties and covered by the Guarantee Certificate (CG).

 

Pos-Shipment Insurance

Post-shipment operations follow the standards of other risks covered in medium and long-term operations, adding to the nature of the risk, the possibility of applying a percentage to cover up to 100% against political and extraordinary risks.

The assessment of the credit risk of operations reflect by political and sovereign aspects of the importer. Operations are characterized by exports financed with payment terms of more than 2 years and may conceive the need of structuring guarantees mitigation of transaction risk. In general these projects are related to exports of goods and services, or contracts with specific characteristics.

Risk assessment of the projects and their respective premium rate are directly related to a set of variables that follows the best practices of Export Credit agencies.

Credit Insurance in the Defense division is provided for military aviation, naval vessels and patrol boats, combat vehicles, helicopters, missiles and components, radars, logistical services and packages, amongst others.