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

Product Name Chubb Commercial Insurance
Link to Product Website
Provider Name Chubb Political Risk
Product Definition Chubb Commercial insurance coverage can protect among other against the following risks:

1) Contract Frustration:
Contracts weren’t made to be broken. But, sales and trade contracts in emerging markets don't always remain intact. Contracts that involve companies that cross borders can become moot due to a number of circumstances, including:

* Trade embargoes
* Import/Export license cancellation
* Inconvertibility or transfers of currency
* Unilateral termination of contracts by governmental entities
* Non-payments by a government buyer or private company

Contract Frustration insurance protects against breach of contract by agents of a foreign government or breach of contract by a private entity that is caused by an act of a foreign government.

2) Confiscation, Expropriation, Nationalization

Companies that buy from vendors or sell to clients in emerging markets (those outside the United States, Canada and Western Europe) are exposed to a variety of risks. Chubb’s Confiscation, Expropriation, Nationalization (CEN) insurance is designed to protect companies against the loss of an investment or asset due to a wide range of circumstances, including:

* Confiscation, expropriation, and nationalization of assets
* Willful destruction of assets
* Passage of new laws that make the business environment unfriendly for foreign investors
* Loss of permanent or mobile investment/assets due to acts of government
* Currency inconvertibility or transfer
* Political violence (including war and terrorism)
* Deprivation
* Forced abandonment
* Forced project relocation
* Forced divestiture
* Selective discrimination
* Third party blockade

Many companies can benefit from Chubb’s CEN insurance, including manufacturers, financial institutions, energy companies and contractors.

3) Wrongful Calling of Guarantee

Companies that conduct business in emerging markets post a variety of bonds, including bid bonds, performance bonds, prepayment bonds and retention bonds. Unforeseen circumstances (such as civil war) may prompt the foreign government or contracting parties to call a bond arbitrarily. Wrongful Calling of Guarantee insurance indemnifies a company for the value of the bond that was called as a result of:

* A wrongful call of the guarantee by a government entity
* A private entity calling the bond due to a political event (known as a rightful call of guarantee)

Source: http://www.chubb.com/businesses/cci/chubb2069.html

Product Type Political Risk Insurance
Defined Risks Covered Political Risks: Breach of Contract
Political Risks: Expropriation
Political Risks: Currency Transfer and Convertibility
Political Risks: War and Civil Disturbance
More on Risks Covered
Eligible Form of Investments Bonds
Bank Loans
Non-Bank Loans
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions All
Eligible Applicants n.a.
Eligible Sector n.a.
Maximum Tenor 5+ to 10 years
Max. Absolute Amount (USD) 0 to 50 MM
Max. % of Project Costs Covered Max./under 25%
Max. % of Export Content Covered Max./under 50%
Fees Market-based

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: No
Environmental standards: No
Social standards (incl. Human Rights Standards; Labor Rights Standards): No
Source(s) n.a.
For more information, contact n.a.
Attachments n.a.
Additional Links n.a.
Deals n.a.

Provider Name Chubb Political Risk
Institution Type PUBLIC: Multilateral Development Bank
Ownership n.a.
Head Office 15 Mountain View Road Warren, NJ 07059
Provider Home Country United States
Rating n.a.
Main Risk Mitigation Products n.a.
Attachments n.a.
Additional Links
Entered On: 02/14/2008 at 05:06 PM
Updated On: 02/10/2012 at 02:23 PM