Overview
Cross-border trade involves political and commercial risks, particularly in economically weak or politically unstable countries. To safeguard exports and maintain competitiveness, exporters use credit insurance, which may be provided by private insurers or through state-backed export credit guarantees.
Private Credit Insurance
Private export credit insurance typically provides limited coverage and often excludes or severely restricts country risks in politically or economically unstable regions. It generally covers short-term receivables and focuses on commercial (buyer-related) risks rather than political ones.
State Export Credit Insurance in Germany – “Hermes Cover”
In Germany, state export credit guarantees are commonly known as “Hermes cover” (Hermesdeckungen). These guarantees have been administered since 1949 by Euler Hermes Deutschland AG and PricewaterhouseCoopers (PwC) under mandate from the Federal Government.
- Responsibility: The Federal Government assumes the financial risk and policy responsibility.
- Administration: Managed operationally by Euler Hermes and PwC.
- Decision-making: The Interministerial Committee (Interministerieller Ausschuss – IMA) decides on applications and cover conditions.
- Principle of subsidiarity: State guarantees are only provided where adequate private insurance is unavailable—typically for long-term tenors, large projects, or political non-payment risks.
Forms of Cover / Product Types
a) Hermes warranty or guarantee
- If the foreign debtor is a public-law entity or sovereign, cover is issued as a Federal export warranty (Bundesdeckung – Gewährleistung).
- If the debtor is a private-law entity, cover is issued as an export guarantee (Bundesgarantie).
Guarantees typically include insolvency risk, with pricing adjusted accordingly
b) Main product categories (examples; non-exhaustive)
| Category | Cover |
| Portfolio cover | APG; APG-Light; revolving supplier credit cover; revolving financial credit cover; framework credit cover |
| Single-risk cover | Supplier credit; performance cover; financial credit; pre-shipment/manufacturing risk; construction cover; Airbus; project finance; ship finance |
| Special forms | LC confirmation risk cover; bond (aval) guarantees; confiscation risk; leasing cover; securitization guarantees; KfW refinancing securitization; contract bond cover |
Covered Risks
Political risks (non-commercial):
- Government measures (legislative, administrative, or judicial)
- War, civil unrest, or revolution
- Payment transfer restrictions or moratoria
- Impossibility of performance due to political events
- Pre-shipment losses caused by political developments
Commercial risks:
- Buyer insolvency or protracted default
- Non-payment after due date
- Failure or impossibility of enforcement
Premium Calculation
Premiums are determined based on:
- Country risk classification (sovereign and buyer risk)
- Type and tenor of the transaction
- Quality of security/collateral
- Experience and creditworthiness of the buyer
Since 1 September 2011, premiums have been set in accordance with the OECD premium classification system, ensuring alignment with international export-credit discipline.
Legal Basis and Administration
- Legal framework: Budget law and administrative guidelines (Richtlinien für die Übernahme von Exportkreditgarantien der Bundesrepublik Deutschland).
- Operational portal: AGA-Portal (www.agaportal.de) — the official information platform for export credit guarantees.
(Source: AGA‑Portal. All information without guarantee.)