Export Guarantee and Insurance Corporation

Export Guarantee and Insurance Corporation, a.s. (EGAP)

The Export Guarantee and Insurance Corporation is MDACI’s Export Credit Guarantor. EGAP was founded in June 1992 as a state-owned export credit agency, insuring credits connected with exports of goods and services from the Czech Republic against political and commercial risks. EGAP, now part of the state export support program, provides insurance services to all exporters of Czech goods irrespective of their size, legal form and volume of insured exports

 

In compliance with Act No. 58/1995 Coll, on insuring and financing export with state support, as amended, EGAP is a joint-stock company, fully owned by the state. The Czech Republic exercises its shareholder's rights through central authorities of the state (Ministry of Finance, Ministry of Industry and Trade, Ministry of Agriculture and Ministry of Foreign Affairs). The Company's main activity is insuring export credits against political risks and against a combination of political and non-marketable commercial risks (hereinafter called "political risks"). This kind of insurance is realized with state support in the form of a state guarantee for EGAP's obligations arising from insurance of those risks.

 

The mission of EGAP is to provide credit insurance with state support and assist thus Czech exporters, investors and their banks in situations when they are unable to find insurance for risks connected with financing of an export or of a foreign investment on the market. This applies particularly to cases of exports of large capital goods, power producing equipment, machinery and technological equipment as well as of transportation structures and of investments on a credit with the repayment term exceeding 2 years. The already high risk of these large projects is usually further aggravated by the fact the extended credit should be repaid by a debtor in a country with a higher level of the political risk. The state support in credit insurance is based just on possibility of insuring such (so-called non-marketable) risk and enable in this way conclusion and realization of export projects otherwise well prepared in all respects. It is a standard pro-growth and anti-crisis tool with a very rapid return of invested financial means used for stimulation of economy in all developed countries.

 

By its activities, EGAP fulfills role of a so-called ECA (Export Credit Agency). It complies with a complex of OECD and EU rules restricting the state export support to those products and territories only where the commercial credit insurance companies are not interested to operate, i.e. primarily to medium- and long-term export credits and to territories with a higher level of the political risk. These rules also ensure that the exporters from individual countries cannot compete by the extent of the state support but exclusively by quality and price of goods and services.

 

Today, EGAP thoroughly covers a complete spectrum of needs of exporters as well as of their financing banks by its insurance products. EGAP’s offer has been continuously widening since its foundation and it includes, in addition to insurance of export buyer and supplier credits which are typically offered by state credit insurers, also insurance of credits for pre-export financing of production and recently also for pre-export financing of commercial utilization of results of science and research, insurance of investments of Czech entrepreneurs abroad as well as of credits for their financing and insurance of guarantees issued by banks on behalf of Czech exporters. EGAP thus covers with its insurance the full range of the risks the exporters may face in preparation and realization of an export contract.

 

EGAP’s insurance with state support is important for a Czech exporter also from aspect of facilitation of access to export financing because it is accepted by banks as a full-sized security of a credit which is lowering expenses for creation of reserves pursuant to regulations of the Czech National Bank. In the end, this enables the Czech exporter to compete successfully with foreign companies also in terms and conditions of financing and insurance which are offered together with goods and services. Undoubtedly, EGAP assists in this way in increasing of competitive edge of the Czech exporters on international markets.

 

Short-term commercial insurance against risks of non-payment resulting from insolvency or protracted default of a foreign or domestic buyer is offered by KUPEG credit insurance co-owned by EGAP and the Belgian credit insurance company Ducroire – Delcredere SA. N.V.
 

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