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There are good reasons to consider Political Risks insurance from AIG

Opportunity vs risk

In today’s global market, most companies are aware of the potential benefits associated
with exploiting opportunities in emerging markets. However they are also aware
of the risks associated with operating in a foreign country and under a foreign
jurisdiction.

The confidence to engage

There are good reasons why some companies are uncomfortable with taking on the risks associated with doing business in emerging markets. Political Risk Insurance helps companies to trade or invest, internationally, confident that the political uncertainties of doing business in a foreign country are mitigated.

What are the potential political dangers?

These risks may include: 

  • Failure of a sovereign entity to honor payment obligations under a promissory note, bond, loan, guarantee, or letter of credit
  • Financial loss caused by unilateral repudiation of a contract by a government buyer or supplier
  • Government buyer wrongfully calling on a guarantee or bond provided by the company
  • Inability to repatriate equipment once a project or contract is completed
  • Seizure or confiscation of owned or leased assets
  • Politically motivated violence that results in property damage, or evacuation and repatriation of the local team leaving valuable equipment behind
  • Inability to repatriate or convert currency earned in that country
  • Failure of a project company to honor its payment obligations to senior secured lenders pursuant to the terms of the loan agreement

Who is it for?

Exporters, importers, contractors, project financers, financial institutions, and companies with overseas risks, stock or equipment.

What is covered?

 

Loss of mobile assets or inventories in a foreign country through political acts.

Market

Companies with overseas investments, manufacturers, traders and financial institutions.

Features & Benefits

  • CEND Insurance can be arranged to cover losses of a company’s physical assets for up to $150 million in any one country and terms of up to 15 years
  • Policies can be written for a contractor’s exposure in a single country or in multiple countries
  • Coverage is available for a full 100% of asset value

Cover

Our Comprehensive Contractors Plant & Equipment Insurance (CCPE) form covers the following perils: 

  • Expropriatory Acts
  • Deprivation
  • Forced Abandonment
  • Political Violence, War

Loss of equipment in a foreign country through political acts.

Market

Contractors with mobile, plant and equipment in foreign countries.

Features & Benefits

  • Insurance can be arranged to cover losses of a contractor’s physical assets for up to $150 million in any one country and terms of up to 15 years
  • Coverage is available for a full 100% of asset value
  • 180 days waiting period
  • Policies can be written for a contractor’s exposure in a single country or in multiple countries
  • Coverage is available for up to 100% of investment value

Cover

Our Comprehensive Contractors Plant & Equipment Insurance (CCPE) form covers the following perils: 

  • Expropriatory Acts
  • Deprivation
  • Forced Abandonment
  • Political Violence, War

Losses caused by political acts that may interfere with the fulfillment of a contract including but not limited to non-payment by a Government or a Sovereign Obligor, exchange Transfer restrictions preventing conversion and transfer of foreign exchange under a contract, export Embargo and licence cancellation resulting in the frustration of an Insured contract, war resulting in the inability to perform contractual obligations.

Market

Exporters, Importers, Trade and Financial Institutions.

Features & Benefits

  • Political risk events occurring before, during or after shipment of goods or provision of services can be covered
  • Policies are tailored to match the terms of the underlying contract
  • Covered transactions may be denominated in hard currency or local currency
  • Underwriting capacity up to $150 million per transaction with a policy term of up to 15 years

Cover

  • For transactions with public sector counterparties
  • Non-payment by a sovereign buyer
  • Non-delivery by a sovereign supplier
  • Non-payment under a Letter of Credit issued by state owned banks

For transactions with private sector counterparties:

  • Exchange Transfer restrictions preventing conversion and transfer of foreign exchange under a contract
  • Export Embargo and licence cancellation resulting in the frustration of an Insured contract
  • War resulting in the inability to perform contractual obligations
  • Imposition by the government of any Act, Law or Decree that results in the inability of the insured to perform their contractual obligations

Losses from On-Demand-Bonds or Guarantees due to political acts.

Market

Construction companies, contractors, business exporters, trade finance organisations.

Features & Benefits

  • Coverage offers protection to contractors against  losses caused by the arbitrary and unfair calling of a guarantee by a government sector obligor, legitimate calling of a guarantee due to actions by either the foreign government or the contractor’s government, calling of a guarantee due to the outbreak of war, revolution or insurrection, non-honoring of an arbitration award, seizure of investments, assets or government acts that interrupt loan payments or deprive lenders of fundamental creditor rights following a default
  • Indemnity is available for up to $150 million in any one country with terms of up to 10 years
    Contractors can obtain coverage for up to 95% of the value of each bond or guarantee

Cover

Insured events include:

  • Arbitrary and unfair calling of a guarantee by a government sector obligor
  • Legitimate calling of a guarantee due to actions by either the foreign government or the contractor’s government
  • Calling of a guarantee due to the outbreak of war, revolution or insurrection
  • Non-honouring of an arbitration award when the contractor has obtained an arbitration award in its favour

Failure of the project company to honor its payment obligations to senior secured lenders pursuant to the terms of the loan agreement.

Market


Lenders to projects in energy, transportation (road, port and airport concessions), telecommunications, oil & gas, mining, and various other sectors.

Features & Benefits

  • Coverage offers protection to lenders against commercial as well as political risks. Whether default on a project loan is caused by a political or a commercial event, AIG’s comprehensive non-payment insurance policy can respond.
  • Indemnity is available for up to $150 million in any one country with terms of up to 25 years.
  • The insured portion of the loan may equal but not exceed the amount of risk retained by the insured lender.

Cover

Types of loans include:

  • New or existing loans
  • Cross-border or domestic loans