Premium

The OECD Premium Agreement limits the pricing of medium and long term (repayment period 2 years or more) Buyer Credit, Credit Risk and Letter of Credit Guarantees by setting Minimum Premium Rates based on the target country and on the risk classification of the buyer, borrower or guarantor. The ECAs of the OECD countries shall not undercut these minimum rates.

• When setting premiums, Finnvera takes into account the price indications of the international capital markets, other lenders and other risk takers as well as the competitive situation (matching).
• The final premium rate is determined based on a case-specific risk assessment.
• The premium for a Buyer Credit Guarantee is a flat fee on the principal of the credit, and is normally charged on each disbursed amount of the credit. The premium for Credit Risk and Letter of Credit Guarantee is a flat fee calculated on the guaranteed receivables, and is normally charged in one instalment.

Short-term export credit guarantees (repayment period less than 2 years) usually cover corporate risk. The guarantee types are Export Receivable, Credit risk and Buyer Credit Guarantee.

Short-term pricing is based on the repayment term and the premium class, which is based on the risk assessment of they buyer. There are three premium classes: I, II and III. The premium class is based on the operational environment of the buyer company, the quality of information available concerning the buyer, payment experience and any other positive or negative factors.

Short Term Premium (%)

These premiums are applied to traditional credit insurance where the post-delivery receivables are covered.