Allen & Overy (A&O) has acted for the Department for Business, Enterprise & Regulatory Reform (BERR) on a new £5bn reinsurance scheme intended to support UK businesses.

Insurance chief Philip Jarvis, assisted by corporate partner Stephen Mathews, led the A&O team on the deal, which will provide state-backed reinsurance to credit insurers providing trade credit insurance to companies.

The scheme, which is predominantly intended to help businesses in the retail, manufacturing and construction sectors, was announced as part of Chancellor Alistair Darling's Budget last month.

The Chancellor said the Government will provide a 'top-up' trade credit insurance scheme to match private sector trade credit insurance provision if insurers reduce their cover to businesses. The scheme, which came into effect last week (1 May) comes as insurers reduced their level of cover to UK companies, creating problems with supply chains.

Jarvis told Legal Week: "There has been growing concern that a number of supply chains will be adversely affected by a reduction in credit insurance cover provided to UK companies. The reinsurance provided by BERR is an important step in returning liquidity to the UK credit insurance market and will help boost levels of trade and oil the wheels of business."