German Federal Export Credit Guarantees (Hermes AGA)

Hermes AGA denotes the federal mandate under which Euler Hermes Aktiengesellschaft manages the Federal Republic of Germany's export credit guarantees, known as Hermes cover, together with untied loan guarantees. Federal materials state that the Federal Government commissioned Euler Hermes Aktiengesellschaft to manage these funding instruments, Export Credit Guarantees and Untied Loan Guarantees, as mandatary of the Federal Republic. A separate mandatary, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, manages Guarantees for Direct Investments Abroad.

Hermes Cover has protected exporters and banks from commercial and political payment defaults since 1949 as an instrument for promoting foreign trade. Cover is granted only where private industry does not offer appropriate or sufficient insurance. The risk of bad debt loss is transferred, to a large extent, from the exporter or financing bank to the Federal Republic, and policyholders pay a premium set against the risk.

Mandate and institutional form

The official export credit agency (ECA) function for German medium and long term export credit cover runs through this federal mandate rather than through Euler Hermes Aktiengesellschaft writing Hermes Cover as a private insurer on its own account. Euler Hermes Aktiengesellschaft is listed for Germany in the Berne Union member directory. The AGA and Federal Export Credit Guarantees websites, and the associated customer portal, sit within the scope of that mandate for application and servicing of the federal instruments.

Investment Guarantees for direct investments abroad are managed separately by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft on federal mandate. Untied Loan Guarantees, administered by Euler Hermes Aktiengesellschaft for the Federal Republic's account, support eligible raw material projects abroad outside the classic tied export credit framework.

Products for exporters and banks

Export Credit Guarantees protect German exporters and the banks financing exports against political and commercial payment risks. Political causes of loss include warlike events, civil unrest or payment restrictions arising from exchange controls. Commercial causes include protracted default or insolvency of the buyer.

Cover is available before and after dispatch. Manufacturing risk cover protects during production, while export credit guarantees cover risk after delivery. Financing may take the form of supplier credit, where the German exporter applies for cover, or buyer credit, where a bank finances the foreign buyer and seeks buyer credit cover against non-payment. Published product families for exporters and banks include single transaction cover, whole-turnover policies, revolving cover, leasing cover, contract bond cover and shopping-line or framework credit structures.

These instruments are federal export credit guarantee products administered under the mandate. They are a separate product world from private market credit insurance written under related commercial brands.

Eligibility and risk justifiability

Two criteria govern federal cover: eligibility for cover and justifiability of the underlying risk. Transactions are eligible where they fit the supporting intentions of the Federal Republic. Exports by small and medium sized enterprises are treated as particularly deserving of support. Restrictions can arise from the type of goods, the country of destination, the parties involved, payment terms, or environmental, social, human rights and anti-corruption considerations.

The Federal Government covers only transactions judged justifiable on commercial and political risk grounds. Buyer creditworthiness and country risk are scrutinised as part of that assessment. Cover normally concentrates on emerging and developing markets; short term cover for buyers in the EU and other high-income markets is generally treated as a marketable risk and left to private credit insurers, since federal cover under the mandate is intended to complement rather than displace private capacity.

Hermes AGA and the OECD Arrangement

Hermes Cover for medium and long term officially supported export credits is granted in accordance with national rules and, for Germany as an Arrangement Participant, the disciplines of the OECD Arrangement. Those disciplines apply to official support for export credits with a repayment term of two years or more, and set minimum premium benchmarks and related terms for such support.

Buyer credit cover sits in bank documentation as federal cover assigned or noted for the lender. The loan agreement sets payment and default terms between borrower and bank. The cover instrument separately sets the covered percentage, covered risks, exclusions, waiting periods, premium and claims conditions. Credit review identifies which federal instrument applies, who holds the policy, what percentage is covered, and whether Arrangement terms govern the tenor.

Institutional boundaries

Hermes AGA denotes federal mandate administration, not advice that substitutes for reading the specific policy wording of an issued cover. The AGA sites state that they give general information on the federal schemes and do not constitute individual legal or economic advice. Private credit insurance written commercially and federal Hermes Cover written for the account of the Federal Republic remain separate product worlds even where the same corporate group is involved on the private side.

Hermes AGA is therefore federal Hermes Cover and related untied loan guarantee capacity, administered by Euler Hermes Aktiengesellschaft for the Federal Republic under a public mandate, priced and documented under German eligibility rules and Arrangement disciplines where applicable. This page stays institutional and definitional. It does not address deal origination or counterparty monitoring.