Australia’s Export Finance and Insurance Corporation (Efic) has signed a reciprocal reinsurance agreement with Euler Hermes, Germany’s export credit agency (ECA), making it the fourth cooperation agreement Efic has secured over the past year.

This agreement enables Australian and German companies to more easily take part in international contracts and benefit from the streamlined financing packages and administrative efficiencies created under this agreement.
“Overseas buyers find reciprocal reinsurance agreements particularly appealing when choosing suppliers because of the ‘one-stop’ service available and the cost savings provided. These types of agreements open doors for Australian exporters and provide them with a competitive advantage,” explains Chang Foo, head of product management and risk transfer at Efic.

With increasing globalisation it is now common practice for projects to be sourced from multiple countries.

“This type of multisourcing provides Australian exporters with opportunities not only to take lead roles but also to be invited by overseas companies to be sub-contractors to the main export contract,” says Foo.

Under reinsurance agreements, the lead ECA provides export credit cover for the entire transaction on its usual terms, while the other ECA, whose exporter is a sub-contractor, provides reinsurance for its portion of the transaction to the lead ECA. Buyers and borrowers need only negotiate one set of documents with the lead ECA.

Other reinsurance agreements have been established with EKN of Sweden, ONDD of Belgium and Nexi of Japan.

Efic will continue to explore the reinsurance network with other countries to support the development of international business and create opportunities for Australian exporters.