When it comes to the movement of goods, an array of products are available to shippers to insure their goods against loss, damage, theft or mishandling. There is also insurance that can keep their business afloat and keep trade flowing. Consider Skyworks Solutions Inc., a Woburn, MA chipmaker and global leader in wireless semiconductors. When the sale of their semiconductors was soaring, they needed to boost capacity and research and development. Their balance sheet, however, was weak and debt laden due to a recent merger. This meant Skyworks would need to borrow money. But traditional borrowing methods was costly, and in some cases, unavailable. Simultaneously, the company faced difficulties arranging for asset-based financing. Lenders were wary of the quality of the foreign receivables Skyworks wanted to use as collateral. Banks were also concerned about the political and economic risk in China, Korea and other Asian countries where Motorola, Nokia, Ericsson and the company’s other blue-chip customers operated. Nevertheless, Skyworks was able to get a $50 million bank line of credit due to Skywork’s ability to strengthen the creditworthiness of its receivables. How did they do it? With trade credit insurance purchased through Atradius Trade Credit Insurance, Inc. of Hunt Valley. As a result, the chipmaker was able to cover about $60 million of its $94.4 million in receivables, and ensure that the amount that would be paid to the company even if a customer went insolvent. “The trade credit insurance allowed us to unleash cash at a time when we needed to feed growth, says the company’s vice president of finance. As a result, Skyworks was able to more than double its revenues in a short time and become a key player in the specialty-chip market for cell phones and other handheld communication devices. Niche Insurance This form of trade insurance is no doubt a niche service. However, given today’s economic environment, it can insure against the risk of nonpayment of suppliers in cases of insolvency where the supplier goes bankrupt or defaults when there is a long period of low payments. It’s a business Atradius is experienced in. Richard Ariens, president of Atradius, reveals that his company insures some $400 billion of trade worldwide. “We consider ourselves the oil in the machine of trade,” Ariens says. Whereby Atradius used to focus on exports only, today the company considers all global trade. In fact, because the company’s data base consists of millions of buyers around the world, Atradius tries to facilitate trade by putting buyers in touch with other buyers even when they do not have their own credit terms or a relationship. “The most important thing is our product allows our customers to continue trading,” he says. “Without the insurance, companies would take more risk and banks that offer financing would be asking lots of questions.” That brings up another point. Sometimes credit insurance is not only about covering losses; it’s about answering to banks and stakeholders, and addressing how much risk are they willing to take. Trade insurance can help share in that risk. “In some cases, companies may even get better financing terms from their bank,” Ariens adds. While not certain if it is a developing trend, one particular footnote is that in the last few months Atradius has witnessed an influx of inquirers from logistics and transport companies. Cargo Insurance Updates There are many issues regarding loss, theft, damage or the mishandling of cargo that relate to cargo insurance. Mike Brown, executive vice president of Elk Grove, IL-based Avalon, reports that increasingly important are insurance issues regarding the trucking industry. The reason: more and more subcontractors are being hired by transportation companies and shippers. The biggest change he notes is that when a shipper or forwarder hires a particular trucking company, they become responsible for the actions of that company. Recently,