RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Political Risk Insurance
Link to Product Website
Provider Name ATI (African Trade Insurance Agency)
Product Definition Companies normally purchase political risk insurance to protect themselves against specific losses that could negatively impact their performance such as government action, inaction, or interference that would result in financial loss. It offers protection to investors, suppliers or lenders, against various risks.

Specific risks insured under this category include:

1) Expropriation
2) Transfer restriction
3) War, civil disturbance or civil commotion
4) Embargo
5) Arbitral award default
6) Comprehensive non-payment
7) Mobile assets cover
8) Unfair calling of bonds
9) Foreign direct investment insurance

Product Type Political Risk Insurance
Defined Risks Covered n.a. More on Risks Covered
Eligible Form of Investments n.a.
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions
Burundi   Congo, Democratic Republic of   Kenya  
Madagascar   Malawi   Rwanda  
Tanzania   Uganda   Zambia  
More on Eligible Countries
Eligible Applicants All
More on Eligible Applicants
Eligible Sector No Specific Sector
Maximum Tenor 5+ to 10 years
Max. Absolute Amount (USD) 50+ to 100 MM
Max. % of Project Costs Covered 25+% to 50%
Max. % of Export Content Covered Over 85+%
Fees Market-based
Cost and Main Terms:

An annual insurance premium is charged based on a price to risk model. On the credit risk insurance products, the premium is based on the percentage of annual turnover. For political risk insurance products the estimate is calculated based on the value of the transaction or investment on a pro-rated basis.

The premium rate charged depends on a number of factors such as: policy structure; credit worthiness of the risk counterparties involved; and the level of risk retention assumed. For ATI’s whole turnover credit insurance, clients can be expected to pay a premium of approximately 0.6 - 1.9% per annum of annual sales volume. For political risk insurance the premium is based on the country risk assessment. For both political risk insurance and single obligor credit insurance the premium ranges between 2 - 3.5% per annum of the transaction or investment value. ATI also charges a one-off credit investigation fee for each trade credit limit requested, and a quarterly credit-monitoring fee for each approved limit.

The policy period is up to 10 years with no minimum transaction size. The maximum project size with co-insurance/reinsurance is US$100 million for political risk and US$50 million for credit risk.

More on Fees
More on Country Classification

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: No
Environmental standards: Yes link
Social standards (incl. Human Rights Standards; Labor Rights Standards): No
Others:
Source(s) n.a.
For more information, contact George O. Otieno
Chief Executive Officer, African Trade Insurance Agency
Attachments n.a.
Additional Links n.a.
Deals n.a.

Provider Name ATI (African Trade Insurance Agency)
Institution Type PUBLIC: Multilateral Development Bank
Ownership Member countries, Altradius, COMESA, PTA Bank, ZepRe
Head Office P.O. Box 10620, 00100, Nairobi, Kenya Phone: + 254 20 2719727/2726999 Fax: + 254 20 2719701
Provider Home Country Kenya
Rating n.a.
Main Risk Mitigation Products n.a.
Attachments n.a.
Additional Links
Entered On: 11/06/2007 at 09:22 AM
Updated On: 04/23/2013 at 11:32 AM