Structured Credit & Investment Risks
Structured Credit insurance helps financial institutions, investors and large corporates manage credit default risks, especially those associated with political decisions, economic crises or plain old non-payment by debtors.
Structured credit insurance is useful for:
- International trade (capital and consumer goods)
- Commodities trading
- Investment finance
- Project finance / public works
- Loan and depository notes
- Portfolio risk transfer
- Credit call facilities
We can design policies on a bilateral (deal by deal) or portfolio basis.
Typical claims scenarios
- Breach of contract
- Suspension or cancellation of contract
- Non-payment / non-transfer of funds
- Inconvertibility of currency
- Unfair calling of a bond
- Government moratorium / cancellation of license
- Other prohibition of activity can be covered upon request
What is Political Risk Insurance?
Political risk is a specialised insurance that protects financial institutions in the face of political change, both governmental actions and politically-motivated violence.
Political risk coverage is excluded under many insurance policies, but when you are dealing with high-value globalised transactions, it is vital.
Political risk insurance is particularly important in:
- Equity investments
- Trade transactions
- Lease transactions
- Assets based overseas
- Supplies of goods or raw materials
Typical claims scenarios
Confiscation, Expropriation, Nationalization (CEN)
CEN kicks in when acts by the host government interfere in the fundamental ownership rights of the insured’s investment.
Covers can be tailored to include:
- Forced Abandonment (FA)
- Selective Discrimination (SD)
- Forced Divestiture (FD)
Arbitration Award Default / Breach of Contract
Arbitration Award Default covers non-payment of a sum enforced at an arbitration ruling.
Offers you protection where politically motivated violence negatively affects your investment.
Examples of political violence scenarios include: war, revolution, insurrection, strikes, riots, civil war, sabotage and terrorism.
Business Interruption (BI)
BI cover compensates for business operations interrupted by political violence. It also reimburses you for ongoing operating expenses and loss of profit during the period of restoration.
Currency Inconvertibility / Transfer Risks
Currency transfer cover protects against delay or inability of a foreign enterprise to exchange local currency into hard currency or to repatriate funds.
Contract Frustration cover protects against cancelled contracts or non-payments resulting from political events in the host country.
As well as political issues such as war, embargo, expropriation and political violence, we can factor in cover for nature perils too (earthquake, tsunami, flood, landslide, etc).
Who does Howden arrange cover with?
Howden access a wide variety of participating insurers, connecting with both local markets and the Lloyds of London market, in order to provide maximum financial stability.
Robust Credit and Risk insurance needs to be completely bespoke.
Give us a call to talk through your needs and options.