5 Reasons to choose Allianz Trade Guarantees

Companies competing for new projects always try to put their capabilities and strengths forward as best they can. But no matter how glittering their track record and balance sheet, the project owners they try to impress invariably demand a guarantee that the proposed work will be completed as agreed or, if not, that an appropriate fee will be paid.

Sureties and guarantees play a big role in this. By financially guaranteeing that your company will meet the conditions set forth in your surety bond, they bring confidence and a high degree of security to the relationship between you and the project owner, the beneficiary of the bond.

In this article, you'll find 5 key reasons why insurers in particular are the best partners for companies looking to secure their projects with surety bonds.

5 Reasons to choose Allianz Trade Guarantees

1	Realeasing liquidity
	Surety bonds from insurers release greater liquidity for your company. By not using a bank facility, your existing bank credit lines are not stretched, and that typically frees up liquidity for other activities: to tender for further business, to invest in capital equipment, meet ongoing payment obligations, and more. “As a financing alternative to bank guarantees, surety bonds can release working capital facilities with your bank. Not every CFO or company director is aware of this alternative!” says Jos Weerdesteyn, Director Surety & Guarantee Benelux.

1

Realeasing liquidity

Surety bonds from insurers release greater liquidity for your company. By not using a bank facility, your existing bank credit lines are not stretched, and that typically frees up liquidity for other activities: to tender for further business, to invest in capital equipment, meet ongoing payment obligations, and more.

“As a financing alternative to bank guarantees, surety bonds can release working capital facilities with your bank. Not every CFO or company director is aware of this alternative!” says Jos Weerdesteyn, Director Surety & Guarantee Benelux.

2	Appetite for greater risk
	An appetite for more risk is built into the DNA of insurance companies. A bank’s maximum guarantee capacity is usually based on a form of security (a mortgage, cash reserves, etc) that will govern how much credit it is willing to extend to a contractor. In contrast, insurance-backed surety providers don’t require that kind of hard security; for an insurance company, security comes in the form of sharing the risk.

2

Appetite for greater risk

An appetite for more risk is built into the DNA of insurance companies. A bank’s maximum guarantee capacity is usually based on a form of security (a mortgage, cash reserves, etc) that will govern how much credit it is willing to extend to a contractor. In contrast, insurance-backed surety providers don’t require that kind of hard security; for an insurance company, security comes in the form of sharing the risk.

3	International reach and local support
	With global market intelligence and surety teams around the world, an insurer such as Allianz Trade is well placed to support your international projects through a combination of centrally managed capabilities and surety underwriters on the ground in the country where your project is taking place. By having direct access to local teams, your business is supported with deep knowledge of the country’s economic conditions, local contract language and its legal framework.

3

International reach and local support

With global market intelligence and surety teams around the world, an insurer such as Allianz Trade is well placed to support your international projects through a combination of centrally managed capabilities and surety underwriters on the ground in the country where your project is taking place. By having direct access to local teams, your business is supported with deep knowledge of the country’s economic conditions, local contract language and its legal framework.

4	Longer project horizons
	For a project that could run for several years, a surety bond from an insurer is likely to be the best approach. Banks are more inclined to issue guarantees up to five years; beyond that, such a long-term bank guarantee is likely to require extended due diligence, security and greater capital costs. In contrast, an insurer is happy to work with bonds that span up to eight years. And working with its reinsurance partners, bonds can be issued that last up to 15 years.

4

Longer project horizons

For a project that could run for several years, a surety bond from an insurer is likely to be the best approach. Banks are more inclined to issue guarantees up to five years; beyond that, such a long-term bank guarantee is likely to require extended due diligence, security and greater capital costs. In contrast, an insurer is happy to work with bonds that span up to eight years. And working with its reinsurance partners, bonds can be issued that last up to 15 years.

5	You work with a reliable and stable partner
	Insurance companies – especially those with an international footprint – typically have much more stable credit ratings than banks. By being able to point to an AA rating at a surety partner such as Allianz Trade, you can build trust and confidence with your client as you put a surety bond in place for a bid or to back project execution. “An AA rating for the bond issuer brings comfort to a beneficiary, especially if you are a mid-sized company market that may not have a track record with the project owner or in the country where the project is based,” explains Jos Weerdesteyn, Director Surety & Guarantee Benelux.

5

You work with a reliable and stable partner

Insurance companies – especially those with an international footprint – typically have much more stable credit ratings than banks. By being able to point to an AA rating at a surety partner such as Allianz Trade, you can build trust and confidence with your client as you put a surety bond in place for a bid or to back project execution.

“An AA rating for the bond issuer brings comfort to a beneficiary, especially if you are a mid-sized company market that may not have a track record with the project owner or in the country where the project is based,” explains Jos Weerdesteyn, Director Surety & Guarantee Benelux.

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