State export insurer to help Korean builders win U.S. contracts

SEOUL, Feb. 4 (Yonhap) -- South Korea's state-run export insurer said Thursday
that it has signed a deal to help local builders win construction contracts in
the United States.
The memorandum of understanding (MOU) with the U.S. affiliate of the Swiss-based
Zurich Financial Services Ltd. could allow companies to secure government
building contracts that may become a lucrative business if the two countries
ratify their bilateral free trade agreement, the Korea Export Insurance Corp.
(KEIC) said.
Seoul and Washington formally signed the free trade pact in June 2007 and are
currently waiting for the pact to be approved by lawmakers. Once the deal goes
into effect, South Korean builders may be able to gain broader access to the vast
U.S. construction market.
Under U.S. law, companies wanting to win government construction orders exceeding
US$100,000 are required to obtain "surety bonds" that guarantee payment in case
of direct losses suffered as a result of a breach of contractual or legal
obligations.
Zurich Financial, which currently ranks fourth among global insurance firms,
started operating in the U.S. in 1987 and can issue surety bonds.
"The MOU allows KEIC to offer guarantees to Zurich that can make it easier for
South Korean companies to be issued the mandatory bonds in the future," the
corporation said in a statement.
In the past, local builders received "stand-by LCs" from South Korean banks that
could be used to receive surety bonds from U.S. financial institutions, but rises
in related fees triggered demands for a different approach.
The KEIC, meanwhile, said that in addition to the U.S. market, many Latin
American companies are asking for surety bonds in building contracts. Such a
trend could further expand the importance of the latest arrangement with Zurich,
it said.
The MOU was signed between KEIC President Ryu Chang-moo and Daniel Riordan,
president of Zurich's surety and risk division, in New York on Tuesday.
yonngong@yna.co.kr
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