Cross-border equity investors and project sponsors purchase PRI to protect their investments against financial losses due to unexpected political events such as expropriatory acts, restrictions on repatriation of dividends or acts of political violence. Policies can be issued either in respect of individual equity investments (or acquisitions) or to cover investments in a number of different countries. Either new or existing investments can be insured.
The “multi-country” form of cover is particularly attractive to multinational companies with a portfolio of exposures who want to be protected against losses in all of those markets. This form of coverage is typically much more cost-effective than insuring the exposures separately. The premium payable can be further reduced by the use of deductibles and other risk retention mechanisms. This type of policy could cover an existing portfolio, while allowing for new investments to be added.
Examples of Sovereign’s coverage on equity and asset investments are as follows:
- Coverage for a major telecom company’s worldwide manufacturing and sales facilities against losses due to expropriation
- Covering a large international commodities firm on a worldwide basis against losses due to expropriation and political violence
- Offering coverage for a major ECA under a facultative reinsurance policy that coves equity investment in a South American pipeline company against losses due to the risk of expropriation
- Being a lead underwriter of aircraft non-repossession coverage which protects aircraft leasing companies against losses resulting from the inability to repossess leased aircraft in emerging countries following lease defaults. We have written policies covering leased aircraft in North Africa, West Africa and Asia.