Surety insurance is the insurance counterpart to a bank guarantee, the surety bond. However, surety insurance has two major advantages over the bank product:
Your advantages
- There are no security retentions
- The bank’s credit line is not debited
Both advantages protect liquidity and allow greater financing flexibility, which is very helpful for companies in particularly challenging situations. As Germany’s market leader for bond-related services, we know our way around the DACH insurance market and beyond better than anyone else. We have an up-to-date overview of conditions at all times and can offer you the best possible cover. Whether it’s a new contract or optimisation of existing policies – we will be happy to advise you personally.
Many purchasers require their suppliers to provide a guarantee- for example, in the form of sureties. Typically, such guarantees are provided by banks as ‘avals’. However, the amount of bank guarantees made available to you counts against your overall credit line and therefore restricts your financial room to manoeuvre. Bond insurance provides all the same guarantees but it does not impact your liquidity. This makes this option particularly interesting for businesses in sectors from which banks are withdrawing. Companies that have just undergone – or are in the middle of – restructuring are particularly unattractive to banks because of the higher equity capital requirement. Insurers, on the other hand, do not have the same equity capital requirements. As such, they are prepared to take on more risk. In doing so, they look not just at the probability of default but also at the individual types of guarantee available. This leads to significant differences in the evaluation of collateral you need to provide.
While the cost of your bond insurance depends, to the most part, on your own rating, importance is also attached to your business forecast. Banks, on the other hand, look more at your past financial performance. This means insurers may well assess your business more positively than your banks.
Many purchasers require their suppliers to provide a guarantee- for example, in the form of sureties. Typically, such guarantees are provided by banks as ‘avals’. However, the amount of bank guarantees made available to you counts against your overall credit line and therefore restricts your financial room to manoeuvre. Bond insurance provides all the same guarantees but it does not impact your liquidity. This makes this option particularly interesting for businesses in sectors from which banks are withdrawing. Companies that have just undergone – or are in the middle of – restructuring are particularly unattractive to banks because of the higher equity capital requirement. Insurers, on the other hand, do not have the same equity capital requirements. As such, they are prepared to take on more risk. In doing so, they look not just at the probability of default but also at the individual types of guarantee available. This leads to significant differences in the evaluation of collateral you need to provide.
While the cost of your bond insurance depends, to the most part, on your own rating, importance is also attached to your business forecast. Banks, on the other hand, look more at your past financial performance. This means insurers may well assess your business more positively than your banks.
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Energie Bau & technische Gebäuderüstung Maschinen- & Anlagenbau Real Estate Mehr BranchenBeteiligungsgesellschaften & Private Equity
Sie möchten mehr über einzelne Bürgschaftsarten wissen?
Energie Bau & technische Gebäuderüstung Maschinen- & Anlagenbau Real Estate Mehr BranchenBeteiligungsgesellschaften & Private Equity
Why gracher is your leading partner for bond insurance /surety companies:
- access to all the relevant bond insurers
- ability to compare the terms and conditions of individual guarantees to find the best price, using our free software tool “Surety Manager” which draws information from current loan commitments in surety and bank contracts
- the best price on a complete loan commitment for new contracts, as well as for the renegotiation of existing contracts using the “gracher database”, which holds records of over 3,500 data sets
- minimum risk of liability to executive and supervisory boards through legally sound contracts (running review of contracts using our exclusive “Master Cover” tool)
- on-the-ground support wherever you are through our membership of the global “Surety Alliance”
- experience in providing solutions combining syndicates of surety insurers and banks
- expertise in matters concerning vertical and horizontal consortiums, as well as sub-contractor avals
- collateral pool expertise
- all variants of bond insurance – including for industry-specific solutions
- up to date on regulatory changes
Bond insurers flexible in fronting
They also offer a lot of flexibility in fronting matters: For example, if a German insurer doesn’t hold a license for a certain country then one of the insurers or banks in the country in question issues the surety or guarantee on behalf of the European insurer. Insurance companies also accept fronting by banks if the customer insists on a bank aval. Fronting is possible anywhere in the world and does not involve high fees. Fronting partners do not charge commitment fees either. Generally, bond providers offer maturities of up to ten years. That said, 10-year maturities are the exception: In investment-heavy industries, such as the energy sector, sureties are often linked to the commercial contract periods, which are usually shorter.