AIG’s Medium Term Trade Credit product provides protection for manufacturers and financial institutions against loss due to a customer or borrower’s non-payment for capital goods, machinery and related equipment sold on payment terms of up to five years.
- Protects the insured’s balance sheet and extended cash flow against the risk of a customer default.
- Allows capital goods manufacturers to increase sales in highly-competitive markets by offering better financing terms to strategic customers.
- Facilitates attractive financing options for the buyer and seller.
- Helps manufacturers establish a presence in new foreign markets to increase export sales.
- Viable alternative to cash in advance, bonds or letters of credit.
- Indemnifies the insured for loss caused by the failure of the obligor to pay the insured all or part of the financed value of the capital goods.
- The policy period matches the repayment period, with the flexibility to attach coverage up to the obligor’s credit limit for all sales transacted within 12 months of policy inception.
- Credit limits are non-cancellable for the life of the policy. Policies are typically “single-buyer”, written for a specific obligor, though multiple obligors may be included in one policy.
- Premium is calculated using a rate applied to the amortizing balance of the financed value, and is usually payable in full at inception of the transaction.