Export Credit Guarantees
INVEGA will provide special state guarantees to policyholders for the partial payment of the buyer’s debt in cases of export credit insurance where the buyer has failed to settle accounts with the policyholder by the deadlines set in the contract concluded with the policyholder until 31 December 2010 (or if the deadline set in the Communication of the Commission “Temporary Framework for State Aid to Support Access to Finance in the Current Financial and Economic Crisis” is extended – until the expiration of the new deadline). Upon the expiration of the implementation date of the Measure, INVEGA will not provide new guarantees; however, it will have to fulfil its obligations under the INVEGA guarantees issued before 31 December 2010.
Terms and Conditions for the Provision of INVEGA Guarantees
An INVEGA guarantee is provided to the policyholder where:
The policyholder has concluded a credit insurance contract with an insurance undertaking that has been awarded an investment grade (a credit rating assigned by international credit rating agencies is not lower than Baa3 (Moody’s) and/or BBB (Standard&Poor’s) and/or BBB (Fitch Ratings)) and concluded a cooperation agreement with INVEGA;
The insurance risk period is shorter than two years;
Non-marketable and/or temporarily non-marketable risks (non-marketable and/or temporarily non-marketable risks are defined in the Description of Non-Marketable and Temporarily Non-Marketable Risks approved by Resolution No. 1264 of the Government of the Republic of Lithuania of 30 September 2009) are insured;
The policyholder assumes at least 20% of the buyer’s debt risk and meets at least one of the following conditions:
1) The policyholder has a valid credit insurance contract with an insurance undertaking and fulfils it properly; however, due to increased risk the insurance undertaking has adopted a decision regarding the reduction of the buyer credit limit;
2) The policyholder has a valid credit insurance contract with an insurance undertaking and fulfils it properly and seeks to obtain a new buyer credit limit; however, due to increased risk the insurance undertaking offers a lower buyer credit limit than that desired by the policyholder;
3) The policyholder has concluded a new credit insurance contract; however, to increased risk the insurance undertaking offers a lower buyer credit limit than that desired by the policyholder.
After the insurance undertaking has reduced the initial buyer credit limit by 50% or less than 50%, INVEGA has the right to issue an INVEGA guarantee for an amount not exceeding the difference between the initial buyer credit limit and the reduced buyer credit limit.
In cases where the insurance undertaking has reduced the initial buyer credit limit by more than 50%, INVEGA has the right to issue a guarantee for an amount not exceeding the reduced buyer credit limit.
In cases where the insurance undertaking has reduced the buyer credit limit by 100%, an INVEGA guarantee is not provided.
Where the insurance undertaking grants a new buyer credit limit that is lower than that desired by the policyholder, INVEGA guarantees must not exceed the desired buyer credit limit.
The total amount of INVEGA guarantees valid at the same time and issued to a single policyholder may not exceed LTL 5 million.
Non-Marketable or Temporarily Non-Marketable Risks
Taking into account the set requirements, the risks in respect of which INVEGA can provide guarantees to policyholders are established. Non-marketable risks include disaster risk as well commercial and political risks that are related to buyers from non-EU Member States and countries which are not members of the OECD. Temporarily non-marketable risks include commercial and political risks that are related to buyers from:
1) countries which are members of the OECD, except for Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States of America.
2) EU Member States and Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States of America, where the policyholder is a microenterprise, a small or medium-sized company (SME) and its annual export turnover does not exceed LTL 7 million (EUR 2 million). If the policyholder is a large company or a SME with the annual turnover exceeding LTL 7 million, the evidence that the risk cannot be covered in the private insurance market provided by two credit insurance undertakings that have been assigned an investment-grade or four exporters must be submitted.
Procedure for Issuance of INVEGA Guarantees
Seeking to obtain an INVEGA guarantee, the policyholder contacts the insurance undertaking which he has signed a credit insurance contract with. Under the procedure and by the deadlines set in the cooperation agreement, the insurance undertaking submits the application signed by the policyholder to INVEGA. The application form must correspond with the form approved by the INVEGA Management Board. The consent of the insurance undertaking regarding the issuance of a guarantee, in the established form, and a copy of the credit insurance contract concluded between the policyholder and the insurance undertaking are enclosed with the application.
INVEGA is required to analyse applications not later than within five working days after the date of receipt of the submitted application and enclosed documents. INVEGA informs the insurance undertaking and the policyholder about its decision to issue an INVEGA guarantee. After the policyholder has paid the guarantee fee indicated in the decision regarding the issuance of an INVEGA guarantee, INVEGA issue a surety bond and signs a Guarantee agreement with the policyholder.
An INVEGA guarantee enters into force after the Director of INVEGA or person authorised by the Director of INVEGA has signed the surety bond.
The policyholder pays the INVEGA guarantee fee, in the established amount, for the issuance of an INVEGA guarantee or extension of its validity.
The procedure for the calculation of the INVEGA guarantee fee and the refund of part of the guarantee fee in cases where the guarantee has been cancelled or its amount has been reduced is established by Order No. 4-412 “Regarding the Approval of the Description of the Procedure for Calculation and Payment of the Guarantee Fee for Guarantees Issued by the Private Limited Liability Company UAB Investicijų ir Verslo Garantijos to Policyholders” of the Minister of Economy of the Republic of Lithuania of 27 May 2010.
INVEGA guarantees are provided according to the Lithuanian temporary state aid framework prepared in accordance with the Communication of the Commission and provisions of Chapter 5 of the Communication of the Commission.
The gross grant equivalent of the guarantee is calculated in compliance with the provisions of the Annex to the provisional Communication of the Commission. The difference between the “safe harbour” premium indicated in the Annex to the provisional Communication of the Commission and the fee paid for the issued INVEGA guarantee is considered to be state aid.
Aid provided to policyholders by issuing INVEGA guarantees can be applied together with other compatible aid or other forms of EU financing provided that the maximum intensity of aid indicated in the respective guidelines or general exception regulations is complied with.