Political Risk Insurance – investments (“PRI for Equity Investors”)
Of all overseas investments, those in natural resources - energy and mining, in particular - are possibly the most heavily exposed to political risks, starting with expropriation. Extraction businesses rely on operating licenses, permits, concessions or production-sharing agreements that render them highly vulnerable to repudiation, renegotiation and other government actions. Furthermore, many investments are located in unstable regions where terrorism, war, riots and other political events may occur and cause irremediable damage or may force foreign owners to abandon their assets. Balance of payment crises or hard currency shortages may prevent loan repayments or the transfer of dividends to the parent company.
Investments in challenging countries can be covered under Political Risk Insurance for Equity Investors (PRI Equity Investors).
Coverable risks include:
- Expropriation
- Operating license cancellation
- Selective discrimination
- Forced abandonment
- Export / import embargoes
- War, civil war and political violence
- Contract repudiation
- Non-honoring of arbitration award
- Currency inconvertibility and exchange transfer delays