David Neckar brings us up to date on the long-running saga of efforts to craft international regulatory standards for banks, and the role of insurance in responding to those standards.
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Basel Standards
Political Risk Insurance | April 2012
David Neckar
Bilateral Investment Treaties
Political Risk Insurance | November 2011
Lauge Skovgaard Poulsen
For decades, a commonly held belief among international investment lawyers has been that while bilateral investment treaties (BITs) may not necessarily be crucially important for foreign investment decisions, they have an important indirect effect: BITs lower the price and increase the availability of political risk insurance (PRI), thereby reducing the transaction costs of conducting foreign...
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Political Risk Insurance | November 2011
Mariano Gomezperalta and Felton (Mac) Johnston
Fair market value (FMV) seems, at least to investors, a reasonable basis for compensating investment losses caused by sovereigns, but the concept involves many issues and complexities. Here are some insights into international law and practice regarding FMV, and some thoughts about the possibility of FMV compensation under political risk insurance (PRI) policies.
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Bilateral Investment Treaties
Interviews
Investment Disputes and Arbitration
OPIC
PRI Wordings
Reports of Overseas Private Investment Corporation Determinations is a forthcoming publication of Oxford University Press (www.oup.com/us/law), edited by three distinguished international legal experts: international arbitrator Mark Kantor; Michael Nolan, a partner at Milbank Tweed, Hadley & McCloy LLP and adjunct professor at Georgetown University Law Center; and Karl P. Sauvant, Executive Director of the Vale...
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Interviews
Microfinance
Microfinance
PRI Products and Coverages | November 2010
We conducted an interview jointly with Loïc De Cannière, Managing Director of Incofin, the prominent microfinance investor and fund management company, and Lieven Dupon, Senior Underwriter at ONDD, Belgium’s national export credit and political risk insurer. The result is a candid discussion, interesting and informative, and not just with respect to coverage for microfinance...
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Non-honoring
PRI Products and Coverages | May 2010
Edward Coppola
The credit and financial crisis of 2008 – 2009 exposed some deep fault lines in global financial markets. Unexpectedly for many, those cracks first opened up in highly developed markets rather than emerging markets, which conventional thinking would say are more vulnerable to periods of deep financial and credit market instability. Of course, emerging markets...
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Intellectual Property
PRI Products and Coverages | May 2010
Rod Morris
In a speech at the Export-Import Bank’s annual conference on March 11 of this year, President Obama said, “Our single greatest asset is the innovation and the ingenuity and creativity of the American people…There’s nothing wrong with other people using our technologies. We welcome it. We just want to make sure that it’s licensed and...
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Arbitral Award Default (AAD)
Enforcement of Arbitral Awards
Investment Disputes and Arbitration
PRI Products and Coverages | December 2009
Tatyana A. Mikhailova and Felton (Mac) Johnston
Enforcement of an arbitral award against a sovereign or its state enterprises may seem a routine matter, but it is not always so. When the sovereign resists enforcement, an investor must navigate a complex legal and practical course. This article provides an overview of the process and some of the challenges.
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PRI Marketplace | May 2009
Charles Berry
Is there any financial market currently not in turmoil? Yes. There is one at least that is functioning properly, and that is the property/casualty insurance market. In particular, the specialist insurance market for large and complex risks, of which the Political Risk Insurance market forms a small part, is in good health. It was not...
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Microfinance
Microfinance
PRI Products and Coverages | May 2009
Tatyana A. Mikhailova, Felton (Mac) Johnston and Robert T. Wray
Historically, microfinance institutions (MFIs) and their stakeholders have shown a tolerance for the risks of operating in challenging environments as they perform their mission of delivering financial services to poor or low-income clients excluded from the mainstream financial system. Some of the risks associated with microfinance are arguably mitigated by the resilience and sound credit...
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Claims
OPIC
PRI Claims | September 2008
Robert O’Sullivan
The Overseas Private Investment Corporation (OPIC) has long experience arbitrating PRI claims. We invited Robert O’Sullivan, OPIC’s Associate General Counsel, Insurance Claims, to discuss that experience and OPIC’s views of arbitration as a means of dealing with disputes with policyholders. All insurance contracts issued by OPIC (and USAID before it) have provided for resolution of...
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Claims
PRI Claims | September 2008
Robert T. Wray and Felton (Mac) Johnston
A PRI policyholder may make one or more unpleasant discoveries when a political risk loss occurs: The policy doesn’t address what happened or doesn’t clearly do so Policy exclusions or limitations bar or diminish compensation Recovery under the policy is barred or impaired because the policyholder failed to comply with policy terms or cannot meet...
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Lenders Cover
PRI Products and Coverages
PRI Wordings | September 2008
Tony George
After years of contentment with the wordings that have been developed in the commercial political risk insurance market since its start 40 years ago, one has recently noticed a shift from insurers’ traditional protection towards contracts which are more favorable to insureds. It has been a soft market for some time with underwriters chasing business...
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Asian Development Bank
Carbon Finance
PRI Products and Coverages | April 2008
Martin Endelman
We asked Martin Endelman of the Asian Development Bank to explain how the ADB and other institutions are working to support clean energy project financing. Mr. Endelman is Principal Financial Sector Specialist, Central and West Governance and Finance Division, and a veteran of the ADB’s co-financing operations since 1998.
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PRI Products and Coverages
Regulatory Risk | April 2008
Frederick Jenney and Thomas Eldert
Readers of the last edition of this Newsletter will recall our discussion of the importance and challenges of developing PRI wordings that are clear and appropriate. We invited Frederick Jenney and Thomas Eldert of Morrison & Foerster LLP to explore a problem of meaning and wordings of a particular interest: regulatory takings.
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Credit Derivatives
Lenders Cover
PRI Products and Coverages | April 2008
Price Lowenstein
We invited Price Lowenstein, President of Sovereign Risk Insurance Ltd., to discuss the relationships between credit derivatives and PRI.
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PRI Syndications | October 2007
Julie Martin
We invited Julie Martin, a Senior Vice President at Marsh Inc. and veteran of many multiple-insurer PRI placements, to discuss how the difficulties that syndications pose can be overcome.
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Interviews
PRI Marketplace
Richard Stern recently retired as General Counsel of EIC Corporation (Exporters), ending a 32-year career in the trade credit and political risk insurance industry. Prior to joining Exporters in 2001, he had been General Counsel of Citicorp International Trade Indemnity for over 14 years, and prior to that, Assistant General Counsel and Deputy General Counsel...
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PRI Wordings | October 2007
Robert T. Wray and Felton (Mac) Johnston
Over the last two decades the political risk insurance marketplace has experienced remarkable growth and has demonstrated an ability to respond ably to evolving buyer needs. In recent years, however, PRI claims experience has yielded outcomes that have disappointed both policyholders and underwriters. Most PRI transactions are confidential, so there tends to be little appreciation...
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Claims
PRI Claims
In our previous edition we asked PRI claims managers to address questions about the claims process. For the buyer/broker perspective, we sought the opinions of Charles Berry, Chairman of BPL Global, Maura Garych, Senior Vice President, Political Risk Practice, at Marsh, and Paul Aird, Risk Manager, Projects, at Bechtel Corporation.
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ICIEC
PRI Wordings | April 2007
Diana Smallridge
Islamic finance is in the news and is becoming increasingly relevant to the international finance and investment community. Aside from the numerous Islamic finance institutions in the Gulf region and other Muslim countries, some major international banks, such as Citibank and HSBC, offer Islamic finance facilities. Moreover, Standard & Poor’s recently announced the launch of...
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PRI Reinsurance | April 2007
Ben Love
A full understanding of the political risk insurance market requires an understanding of the reinsurance that underpins it. For an explanation, we turned to Ben Love, Vice President of The Benfield Group, a global reinsurance intermediary and leader in reinsurance solutions for insurers of credit and political risks worldwide.
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Lenders Cover
PRI Products and Coverages | April 2007
Jack Barnes and David Neckar
Over time the political risk insurance market has offered increasingly comprehensive coverage for bank loans. We invited Jack Barnes, a Senior Consultant at Willis Limited with thirty years’ experience in financial risk insurance and reinsurance broking, and David Neckar, Practice Leader for Willis FINE Political and Trade Credit Risk Business with more than twenty-five years...
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Claims
PRI Claims
The PRI claims process often receives attention only when losses threaten or occur. By being knowledgeable and prepared to deal with these situations policyholders can avoid delayed compensation, unnecessary effort and expense, or worse, impairment of an otherwise valid claim. Our roundtable of PRI claims managers addresses key questions about the claims process. In our...
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Interviews
PRI Marketplace
Looking out a few years, do you see any major trends or changes in store for the PRI and Trade Credit marketplace? We’re in the risk business, and major trends will be driven by the risk environment. Any clear-eyed assessment indicates more negative developments than positive ones. Of most concern is the loss of faith...
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Aircraft Non-repossession
PRI Products and Coverages | November 2006
Robert T. Wray
Manufacturers of aircraft have been eager to meet the growing demand for passenger and cargo airlift capacity and have encouraged (and, in some cases, assisted) lessors and lenders to expand their horizons to make finance available in developing countries and for weaker and start-up airlines. In many of these circumstances, the aircraft operators cannot provide...
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PRI Pricing | April 2006
Julie Martin
The Assistant Treasurers of two multinational companies, Powerco and Manuco meet at a conference and compare notes on their political risk programs. Powerco, which has invested in an investment grade rated emerging market is surprised to learn that its rates are almost twice as high as those of Manuco with investments in several large below...
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Interviews
PRI Syndications
You specialize in syndicating placements. What are the benefits of PRI syndication? I am a great fan of the syndicated market, partly because I believe the PRI market has to accept the inevitability of real losses, ones that won’t necessarily be recoverable over time, like war risks and terrorism risks. Therefore it is important to...
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PRI Products and Coverages
Ratings Agencies
Recovery Ratings | April 2006
Robert T. Wray
Recovery ratings provided by agencies such as Standard & Poor’s (S&P) and Fitch can help lenders and borrowers assess the prospects of recovery once a default has occurred, open access to particular investors and lenders, as well as to calculate capital requirements, and to price issues. We believe that political risk insurance (PRI) can prove...
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Interviews
PRI Marketplace
PRI Wordings
Q: To what extent do you see an erosion in the boundaries between (a) PRI and Trade Credit Insurance and (b) PRI and financial guaranties. In each case, what are the implications of this erosion? A: It seems to me that the whole market for PRI, Trade Credit Insurance and Investment Insurance/PRI is in a...
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Arbitral Award Default (AAD)
Denial of Justice (DoJ)
PRI Products and Coverages | October 2005
Felton (Mac) Johnston and Robert T. Wray
Investors who rely on international arbitration of contract disputes with sovereign counterparties must be prepared to live with the fact that under the best of circumstances arbitration can be a lengthy process—and may have perverse results. Most investors, however, do not want to assume the risk that an award in their favor cannot be enforced...
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Claims
Lenders Cover
PRI Claims
PRI Products and Coverages
PRI Wordings | April 2005
David Neckar
We invited David Neckar, Practice Leader, Political Risks and Credit Insurance, Global Markets of Willis Ltd. to comment on issues that have arisen out of recent political risk insurance claims in Argentina. Two countries “separated by a common language” was Churchill’s comment on the United States and the United Kingdom. Some have maintained that it...
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