Counter Guarantees

Counter guarantees offer protection to the bond or guarantee-issuing bank against the risk that an advance payment bond,a performance bond, a retention or a maintenance bond is being called unfairly by the beneficiary.

Through a Counter Guarantee, Atradius commits itself irrevocably and virtually unconditionally to reimburse the bond or guarantee-issuing bank for the covered percentage all sums that have been paid out under bondsor guarantees that have been issued by or on behalf of the exporter. When Atradius issues a Counter Guarantee to the bond or guarantee-issuing bank, this usually implies that the exporter’s credit limit with the bank will not be charged for the covered percentage of the bond or guarantee amount.

Atradius will pay the bank irrespective of the reason for the bond or guarantee being called. Indemnification will take place within ten days after the bond or guarantee has been called, of course against the covered percentage. If the exporter or contractor is not entitled to indemnification under the Bond Insurance, the amount that Atradius has paid out to the bank must be repaid within six months. Atradius will only issue a Counter-guarantee if the exporter or contractor has taken out supplemental Bond Insurance with Atradius.

As the Counter Guarantee is unconditional in nature, Atradius requires that certain criteria be met with regard to the financial position and the professional competence of the exporter or contractor. Non-performance may also be a reason why a beneficiary may call a bond or guarantee.