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Bulgarian Export Insurance Agency (BAEZ)

Bulgarian Export Insurance Agency (BAEZ) is an insurance company offering cover against financial risks. Its main products are insurance of payments against the following risks:
commercial risks (non-payment or bankruptcy) of the debtors in transactions for export and on the territory of the Republic of Bulgaria;
political risks (war, strikes, embargo, moratorium on payments, confiscation and nationalization etc.) in the countries of export destinations.

BAEZ was founded in 1998 with share capital of BGN 10 000 500. BAEZ is a joint-stock company with a sole shareholder – the Republic of Bulgaria, represented by the Minister of Economy, Energy and Tourism.

BAEZ operates under two different laws: the Insurance Code (the activity on its own account) and under the Export Insurance Act (on the account of the State). The activity for the account of the State is very important as it concerns the implementation of the national export strategy and it guarantees the cover of payments to the riskiest countries in the world (outside EU and OECD countries), as well as insurance of Bank credits for pre-shipment financing, Credits and financing granted to SMEs, and the risk for industries of primary significance for the Bulgarian economy. In these cases the State guarantees the insurance indemnifications by annually allocated funds in the State Budget.

Insurance of payments

Insurance of credit risks is one of the best solutions for a company as it provides protection from the risk of non-payment of its contractors. This could prevent or limit the company’s collapses and its liquidity problems.
Credit terms are a very frequent and an established practice in the domestic and international trade. In order to develop their competitive advantages by offering the clients more profitable conditions and prices in the business transactions, suppliers take increased risk by trading under deferred payment condition. That is why insurance of the receivables allows the companies to decrease the risk of their business activity, to increase their volumes and to extend their activity on the new markets.

Mechanism of Domestic and Export Credit Insurance /Look diagram above/

Financing opportunities

BAEZ has also developed schemes that facilitate access of the companies to financing. There are two main types of financing schemes:
insurance of a bank credit (for pre-shipment financing or a credit, provided to SMEs) – the insured party is the bank, which provides the credit; the insurance covers the principal and the interest of the credit against commercial risks (non-payment and bankruptcy) of the Debtor.
post-shippment financing under export contracts or deliveries on the territory of the Republic of Bulgaria - the commercial or political risk policy can be concluded for the benefit of a third party, usually a commercial bank, which finances the activity of the Bulgarian supplier. In that case the companies assure themselves higher liquidity within the credit period.

Other financial risk products

insurance of Bulgarian investments abroad – covers the risk of the country of investment;
insurance of a Letter of credit – cover the the failure or refusal of the issuing Bank to honor its obligations in the L/C;
insurance of a Bank guarantee – covers the risk of the calling of the bank guarantee, issued under conditions, stipulated to the Bulgarian supplier or producer (Bid bonds, Performance bonds etc.)

BAEZ’s goal

The nature of the risk constantly changes and that is why BAEZ endeavours to offer the most suitable insurance solutions. BAEZ’s goal is to be the best partner in the assessment and the sharing of the credit risk so that the Bulgarian companies can not only guarantee the present business and have the opportunity to expand it with new buyers and in new markets.