UK Export Finance (UKEF) is an established UK government department whose purpose is to grow UK exports. They do this by providing insurance to exporters (Credit Insurance and bond insurance), guarantees to banks to support funding lines for UK exporters and lending directly to companies e.g. to overseas buyers of UK goods.
UKEF’s Credit Insurance complements the commercial market by covering buyers when the commercial insurers are unable to. As such, the cover is typically for developing or emerging markets. The policy is specific to one buyer, can be for single or multiple orders, for work in progress as well as credit risk and will cover the usual causes of loss: insolvency, protracted default, political risk events. Limits are usually non cancellable with premium payable up front. The goods/service being sold must have minimum 20% UK content and, for EU and certain OECD countries, the manufacturing and credit period must exceed 2 years.
UK Export Finance are the only underwriter to provide single debtor cover for lower value credit limits in emerging/developing markets. Usually able to provide cover when commercial market options are not available.
Products and Services
- Credit Insurance: single debtor export credit insurance
- Overseas investment insurance
- Bond insurance: unfair bond calling and fair calling due to political events
- Bonds Support Scheme: guarantee provided to a bank issuing a bond on behalf of a UK company to support an export contract.
- Export Working Capital: guarantee issued to a bank to support working capital funding provided for a UK export contract.
- Buyer support: either direct lending to overseas companies purchasing UK goods/services (minimum contract value £5m) or by providing a guarantee to an overseas bank who provide the funding locally.
- Supplier credit: guarantee given to a bank to cover payments due under usance Bills of Exchange/promissory notes purchased from a UK company who, in turn, has received them in payment for an export transaction.
Acumen Credit Insurance Summary
UKEF exist to ensure a commercially workable export order is not lost due to unavailability of risk protection or funding. For credit insurance, they play an essential role for exporters seeking to sell to higher risk markets and/or on longer terms i.e. sales usually beyond the appetite of commercial insurers.