Trade and Political Risks

Confiscation, Expropriation,
Nationalization (CEN) Insurance.

What is the exposure?

Companies that have investment outside of the U.S., Canada and Western Europe in plant, property and equipment are at risk of losing their investment  due to acts of government. These foreign assets are potentially at the mercy of government officials in developing countries whose understanding of best business practice is often subservient to their own self-interest. Assets such as a manufacturing plant or even a subsidiary company may be seized by a government, or companies may lose control of their assets. Companies are then forced to write off the seized assets or investment.

Loss Scenario

A U.S. microchip manufacturer establishes a plant in Mexico with a local joint venture partner. Following a dispute with the local partner, the offices of the chip manufacturer are raided by local law enforcement officials. During the raid, vital customer information is damaged or destroyed and the office itself is severely damaged.

Product overview:

It protects companies against the financial loss (ex. an extraordinary write-off) of an investment /asset due to confiscation of assets by a foreign government. The policy protects against loss caused by:

Confiscation, expropriation and nationalization of assets

Willful destruction of assets

Passage of new laws that make the business environment unfriendly for foreign investors

The policy fits an insurance need created by exclusions found in property programs concerning government acts. The policy can be expanded to include political violence (war, civil war, strikes, riots and civil commotion) and the inability to remit profits and dividends produced at the foreign facility.

Coverage highlights:

Up to 10 year policy period

No minimum premiums

May be written on a single country or multi-country basis. Multi country approach is more cost effective and easier to administer. Additional countries and limits may be added to the program.

100% Indemnity

No deductibles for most clients

Bespoke terms and conditions to meet clients specific needs

Additional features available:

Political violence (physical damage) insurance for most assets

Currency Inconvertibility coverage for profits and loan repayments

Sub-limits are available for the following broadening features: forced divestiture, forced abandonment, selective discrimination, third-party blockade, deprivation and non-repossession of assets