(NON FINANCIAL GUARANTEES)
For companies who have foreign assets (other than trade receivables) an entire spectrum of special political risks policies is available, either as a specialized package or a smorgasbord of individual policies to fit a defined purpose.
The U. S Government, through the Overseas Private Investment Corporation ("OPIC") issues policies of Confiscation/ Expropriation/ Nationalization ("CEN") and War risks. To qualify for OPIC insurance the project or assets must have a mutually beneficial economic and environmental impact on both the U.S. and the host country, supported by a detailed analytical study. The host country must also be on a Less Developed Country ("LDC") list promulgated by OPIC with guidance from the U.S. Department of State. If you survive the rigors of qualifying, a distinct advantage to OPIC is that it offers a 20-year policy, renewable and premiums paid annually. The 20-year period includes both a "primary" (or insured) limit and a "stand-by" limit. The stand-by limit is a reserve for appreciation of assets during the 20-year tend and allows for growing the insured limit as needed. For those who make a long term strategic investment in a LDC, the 20-year OPIC policy is attractive.
A growing cadre of private insuring markets write political risks insurance. These policies normally have a maximum term of 3-years forcing the insured to add a third year to each renewing policy which creates a so-called "rolling horizon" This rolling horizon allows for the policyholder to have a 3-year period to either work out of the political problem or file a claim at any time after the occurrence of an insured loss. This is a partial solution to the shorter policy terms available in the private market.
Following is a list of the different types of political risks insurance policies currently available. These policies are in addition to the range of trade credit insurance policies discussed elsewhere on our WebPage.
CEN - Equity in Foreign Land-Based Investments
Contact us also if you encounter any non-trade situation for which these political risks policies night provide a solution.
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