Corporate Insurance Partner - Performance guarantees

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Rule Engine - Munich Re

Performance Guarantees

When designed properly, performance guarantees can be truly business-enabling risk-transfer solutions. This enablement can be realised in the form of increased revenue, cash flow stabilisation, predictable downtime and maintenance costs, more accurate forecasting of future earnings, balance sheet protection and reallocation of contingency capital.

In most cases, performance guarantees strengthen the financial profile of a firm or project and increase its overall attractiveness to potential investors. This enables greater access to funding at more lucrative rates. If debt instruments such as bonds are issued, performance guarantees can enhance the creditworthiness of the issuer and even move bonds out of the "junk" category into the investment-grade rating range.  

Other effects include competitive advantages in respective markets (product differentiation), and can, in specific cases, allow vendors and suppliers to take on the role of a value-creating partner by strategically assuming key risks typically carried by business partners.

Please contact us to discuss your specific situation. We look forward to speaking with you about a solution that is tailored to you.

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This publication is available exclusively to Munich Re clients. Please contact your Client Manager.