PRODUCT

Product Name Political Risk Insurance
Link to Product Website
Provider Name Sovereign Risk Insurance Ltd - Bermuda
Product Definition Sovereign Risk Insurance Ltd. (Sovereign) is one of the world’s leading underwriters of political risk insurance and reinsurance. Sovereign’s clients include many of the world’s largest banks, exporters, multinational corporations, export credit agencies and multilateral agencies. Sovereign is also a member of the Berne Union, the worldwide organization of national export credit and investment insurance agencies.


Sovereign’s political risk insurance products protect lenders against the risk of missed scheduled payments on a loan due to a variety of covered risk events. Corporations or project sponsors are similarly protected against financial losses on their equity investments due to a variety of covered risk events.

Sovereign does not cover private corporate credit risk, including trade credit or structured trade credit insurance. More detailed summaries of each coverage type are found below:

1) Expropriation: Expropriation coverage protects lenders and investors against a broad range of actions by host governments that reduce or eliminate fundamental creditor or ownership rights in the insured loan or investment. In addition to outright acts of nationalization and confiscation, “creeping expropriation” (a series of acts that cumulatively have an expropriatory effect), deprivation of assets or collateral, and blockages of funds intended to be remitted as debt service, dividends or return of capital can be included in Expropriation coverage.

Expropriation coverage can be written for tenors of up to 15 years and amounts of up to $80 million.

Breach of Contract / Arbitration Award Default coverage can also be added to Expropriation coverage to protect lenders or investors against the non-honoring of an arbitral award in their favor by the host government.

2) Currency Inconvertibility / Exchange Transfer: Currency Inconvertibility and Non-Transfer coverage protects against losses arising from the inability to convert local currency into foreign exchange and transfer it outside the host country. Coverage insures against excessive delays in acquiring foreign exchange caused by host government action or failure to act, by adverse changes in exchange control laws or regulations, and by deterioration in conditions governing the conversion and remittance of local currency.

Lenders can cover the conversion and remittance of principal and interest payments due under the insured loan agreement, while an equity investor can similarly cover its dividend or profit remittances derived from the insured investment and the return of capital. Companies providing management or technical assistance can cover fees and royalties.

Coverage can be written for the full amount of exposure, for tenors of up to 15 years and amounts of up to $80 million.

3) Political Violence: Political Violence coverage compensates equity investors for damage or loss of tangible property, and lenders for interruption of debt service caused by politically motivated events of war, civil war, revolution, insurrection, sabotage, terrorism and civil strife.

4) Sovereign and Sub-Sovereign Non Payment: For loans to (or guaranteed by) a host government, Non-Payment coverage protects against financial losses due to non-payment of amounts owed by the host government in respect of loans, sales or service contracts.

Non-Payment coverage can also be designed for certain sub-sovereign or parastatal corporations.

Sovereign and Sub-Sovereign Non-Payment coverage can be written for amounts up to $50 million per transaction, for tenors up to 10 years.

5) Unfair Calling of Bonds: Unfair Calling coverage protects against losses resulting from an unfair (i.e. illegal or capricious) calling by a government buyer or contractor of on-demand instruments, including bid, advance payment, and performance bonds, furnished in respect of a particular project.

6) Non-Repossesion of Aircraft or Mobile Equipment: Non-Reposession coverage protects against loss resulting from host government interference with an insured’s ownership rights with respect to aircraft or other mobile equipment, including exercising the right to reposess and re-export those assets.

7) Other Customized Covers: Sovereign can customize political risk coverage to protest against financial losses due to trade embargoes, license cancellations and other political risks specific to individual transactions and can follow ECA or other private insurers’ wordings on a coinsurance or reinsurance basis.

Sovereign can manuscript policy wordings for individual transactions or unusual risks.

Clients:

Sovereign's clients include many of the world's leading banks, exporters, multinational corporations, export credit agencies and multilateral agencies.

For information on each client group, as well as related case studies, please refer to the following link: http://www.sovereignbermuda.com/client_types/client_types.html

Product Type Political Risk Insurance
Defined Risks Covered n.a. More on Risks Covered
Eligible Form of Investments All
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions All
Eligible Applicants All
Eligible Sector No Specific Sector
Maximum Tenor 10+ to 15 years
Max. Absolute Amount (USD) 50+ to 100 MM
Max. % of Project Costs Covered 100%
Max. % of Export Content Covered Over 85+%
Fees Market-based
n.a.

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: No
Environmental standards: No
Social standards (incl. Human Rights Standards; Labor Rights Standards): No
Others:
Source(s) http://www.sovereignbermuda.com
For more information, contact Price Lowenstein
Sovereign Risk Insurance Ltd.
Email: price.lowenstein@acegroup.com
Phone: (441) 296-4279

Nila Davda
Senior Executive Officer, Sovereign Risk Insurance (Dubai) Ltd.
Email: nila.davda@acegroup.com
Phone: +971 4 511 1900
Attachments n.a.
Additional Links www.sovereignbermuda.com/claims_history/claims_history.html
www.sovereignbermuda.com/client_types/client_types.html
Deals n.a.

Provider Name Sovereign Risk Insurance Ltd - Bermuda
Institution Type PRIVATE: Political Risk Insurer
Ownership Private wholly-owned by ACE Bermuda Insurance Ltd.
Head Office Sovereign Risk Insurance Ltd. 17 Woodbourne Avenue Hamilton, HM 08 Bermuda
Provider Home Country Bermuda
Rating n.a.
Main Risk Mitigation Products Political Risk Insurance
Attachments n.a.
Additional Links
Entered On: 06/29/2007 at 01:06 PM
Updated On: 05/20/2013 at 02:45 PM