Political Risks 

Backed by more than 30 years of experience, AIG can provide tailored coverage that addresses the risks specific to your markets and line of business.

And while political climates may shift, with AIG, your coverage will remain non-cancelable and secure.

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.

There are good reasons why some companies are uncomfortable with taking on the risks associated with doing business in emerging markets.

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

Political Risk Insurance helps companies to trade or invest, internationally, confident that the political uncertainties of doing business in a foreign country are mitigated.
 

Product details 

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

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

 

Who is it for?

 

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

Cover

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

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

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

Loss of equipment in a foreign country through political acts.

 

Who is it for?

 

Contractors with mobile, plant and equipment in foreign countries.

Cover

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

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

Features & Benefits

  • 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

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.

 

Who is it for?

 

Exporters, Importers, Trade and Financial Institutions.

Cover

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

  • 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

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

 

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

 

Who is it for?

 

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

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

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

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

 

Who is it for?

 

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

Cover

Types of loans include:

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

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.

Related Documents

See Political Risk documents

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