Political Risk Insurance 2018-02-16T04:40:00+00:00

Political Risk Insurance

Protect International Projects With Political Risk Insurance

Political Risk Insurance Overview

Political Risk Insurance provides a solution to several obstacles to investing in emerging markets. Investing in emerging markets around the world offers the promise of far reaching opportunities and high rates of return. Both are appealing prospects. The growth of international trade has been expanding unabated for decades and is now approaching $20 trillion per year. It certainly seems that that’s where we’re headed, the political class worldwide is fully supportive and western democracies including the United States are marching inexorably towards globalism.

But, while investments in projects in developing markets are certainly being socially and politically encouraged, they remain unpredictable and fraught with peril, certainly beyond what can be controlled by importers, exporters, investors or lenders. Those kinds of emerging market risks and rewards give even the most sophisticated investors pause. Deals and opportunities with tremendous upside potential offer powerful appeal, but there is also the very real fear that government officials very much like Claude Rains will visit your new project or facility and be shocked, shocked that some activity or another is going on there.

There is a way to reconcile these diverging interests and Global Trade Funding can help. We can significantly limit the political risk associated with emerging market investments and all but eliminate emerging market angst with Political Risk Insurance.


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Election of Coverage

Political Risk Insurance coverage elections for most equity and shareholder debt investments are based on a coverage ceiling and an active amount. The coverage ceiling represents the maximum amount of insurance available for the insured project and future earnings under an insurance contract.

Premiums are calculated based on the active amount, which represents the insurance actually in force, from time to time, during any contract period. The active amount under all coverage must equal the book value of the insured investment at a minimum unless a lower coverage ceiling is elected. There is no charge for the difference between the coverage ceiling and the active amount.

For investment types other than equity and shareholder debt investments, premiums are computed based on the maximum insured amount, the current insured amount, and a standby amount. Maximum insured amount represents the maximum insurance available for the insured investment under an insurance contract. Current insured amount represents the insurance actually in force during any contract period. The difference between the two is the standby amount. Separate premiums are charged for the current insured amount and standby amounts. For loans, premiums are charged on the covered amount, the amount of disbursed principal plus accrued interest, less principal paid to date, and a standby fee is charged for un-disbursed principal

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We offer a range of very competitive trade financing options to fund imports, exports and commodities along with unsurpassed deal structuring advisory services and decades of underwriting expertise. 


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