In this period of increasing economic uncertainty, commercial guarantees can provide a counterweight. When a company has the possibility to provide commercial guarantees, a potential deal will come to signing a lot faster than without, especially in these challenging times. Yannick Van Eynde, our Surety & Guarantee Manager, explains you the advantages of commercial guarantees.
Although I am technically Surety & Guarantee Manager for Allianz Trade, I prefer to think of myself as a solutions pioneer. I’m the central point of contact for my portfolio of clients, which means both keeping up to date with my current customers and growing our book by hunting for new business. To do this successfully, I work closely with our customers and brokers, consider companies’ surety needs and assess whether our existing contract framework is sufficient – and figure out a workable solution if it isn’t.
When we issue a guarantee, we stand surety for our clients related to their obligations towards the beneficiary. In general, there are two types of obligations: you have legal obligations on one side and contractual obligations on the other. As the word says, legal obligations are obligated by law. In order to enjoy a certain benefit or to be able to carry out an activity, the government or government agencies often require the provision of guarantees. Contractual obligations are negotiated between the principal and the contractor. To cover these contractual obligations, we issue commercial guarantees, f.eg. advance payment, performance and maintenance guarantees.
In every step of the negotiating process, there are uncertainties for both the principal and the contractor. Commercial guarantees will reduce, or even eliminate, these uncertainties. To give two specific examples. When a principal signs an agreement, there’s a possibility that the project won’t be finalized accordingly. By providing a guarantee, the principal knows that an external party can compensate him in case of non-performance. On the other hand, a contractor can ask for advance payments in order to cover the expenses made for a specific project, by providing f.eg. advance payment guarantees.

There are many advantages for working with insurers instead of banks, but we can highlight two of them:

  • No ask of collateral: Insurers will not ask for collateral, as banks normally do. Banks usually ask a form of security (a mortgage, cash collateral, etc.) to define the limit of credit or guarantee capacity. For insurers, security comes in the form of sharing the risk.
  • Releasing liquidity: By issuing guarantees under a guarantee facility with insurers, a company can free up liquidity on their recurring credit and/or overdraft facilities with banks. Because guarantees are often issued under these bank facilities.
Within Allianz Trade, we have a team of specialists, who have a clear focus on guarantees and nothing else, being able to pick up requests swiftly and advice on wordings used to protect the contractor, our client.
Allianz Trade is present in more than 50 countries across five continents. Our international presence has the advantages that we have the knowhow on market-specific practices and we can issue guarantees (almost) worldwide and in the local language.
Allianz Trade is part of the Allianz Group and is awarded with an AA rating by Standard & Poor's. Thanks to our guarantees, you can build trust and confidence more easily with your clients.
  • Surety is about building relationships and trust:
    The best part of my job is getting to know people and learning what they need to grow their business. Therefore, I regularly work with C-level executives on multi-million-euro deals.
  • Surety is about expertise
    Being part of a specialized team, with a clear focus on guarantees. We provide our customers with real added value thanks to our deep understanding in both the product and the market.
  • Surety is growing within Allianz Trade
    Our team dynamic is extremely positive across the region and around the world.

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