Policies can be issued either in respect of individual equity investments (or acquisitions) or to cover investments in a number of different countries. Either new or existing investments can be insured.
The "multi-country" form of cover is particularly attractive to multinational companies with a portfolio of exposures, who want to be protected against losses in all of those markets. This form of coverage is typically much more cost effective than insuring the exposures separately. The premium payable can be further reduced by the use of deductibles and other risk retention mechanisms. This type of policy could cover an existing portfolio, while allowing for new investments to be added.
Examples of Sovereign's coverage on equity and asset investments are as follows:
- Sovereign reinsures a major ECA under a policy that covered an equity investment in a South American pipeline company against losses due to the risk of expropriation;
- Sovereign insures an agribusiness client with worldwide asset exposures against losses due to expropriation and political violence.
- Sovereign participates with other coinsurers on a PRI coverage for a client with energy interests in Eastern European and FSU countries. The coverage protects against losses due to expropriation and political violence;
- Sovereign insures a major telecom company’s worldwide manufacturing facilities against losses due to expropriation;
- Sovereign insures a large international commodities firm on a worldwide basis against losses due to expropriation and political violence.
- Sovereign was a leading underwriter under several aircraft non-reposession policies issued to protect large airline industry clients from losses under leases with government airlines resulting from the inability to repossess the leased aircraft following lease defaults. The countries of risk were located in North Africa, West Africa and Asia.
(Click here for an explanation of Sovereign's relationships with Equity Investors)
