Numerous coverage structures are available for companies wishing to mitigate political risks associated with foreign assets. A summary of the most commonly utilized coverages can be found below, but this list is not all inclusive. IRC's Special Risk Group (SRG) is standing by to assist you and can often times obtain well developed quotations with just the most basic of information.

POLITICAL RISKS: EXPROPRIATION-BASED COVERAGES

Contract of Lenders Insurance This type of medium-term insurance policy combines Confiscation, Expropriation and Nationalization (CEN), Currency Inconvertibility (CI), and Political Violence (PV) to protect the Insured (usually a financial institution) against non-payment of loans arising from these perils. This is available for private buyers in foreign markets where the Insured is largely comfortable with the commercial risk of the borrower, but desires coverage against specific political and/or project risks, such as wrongful cancellation of operating licenses. In addition to the Overseas Private Investment Corporation (OPIC), a U.S. government agency, carriers offering this coverage include AIG, Lloyd's of London, Zurich-American, Unistrat, Chubb, and Sovereign.

Confiscation, Expropriation, Nationalization (CEN)and related coverages:

CEN for Permanent Investments Protects an Insured's investment against confiscation by a foreign government. The policy covers an investor's net investment, i.e.: equity contribution plus retained earnings, direct loans to the foreign entity or loans that are guaranteed by the Insured, net accounts receivable and inventory carried on the books of the Insured located in the foreign country.

CEN for Mobile Assets Protects an Insured against confiscation of assets by a foreign government. This can also include "Deprivation" which is the inability to re-export the equipment out of the foreign country. This policy is appropriate for assets that will be located temporarily in a foreign country.

CEN for Inventory and Production Equipment Protects an Insured against confiscation of their inventory or production equipment

Endorsements to CEN Coverage These may be specifically added to cover losses arising from the imposition of laws, orders, decrees, regulations or other restrictions that amount to Selective Discrimination, Forced Divestiture, Forced Renegotiation or Forced Abandonment.

• Currency Inconvertibility (CI)
  Protects an Insured against the inability to remit profits and dividends from a foreign operation to the home country. Only available in conjunction with a CEN policy.
• Business Interruption (BI)
  Coverage for loss of net income resulting from a confiscation may be available on a case-by-case basis in conjunction with a CEN policy. Coverage would indemnify the Insured for losses during a six-month period.
• Political Risk Insurance for Joint Ventures
  Protects an Insured involved in a joint venture against such risks as confiscation, selective discrimination, non-transfer of earnings and arbitration award default, all in one policy
• Deprivation of Collateral
  Covers an Insured against the risk of being unable to exercise their rights with respect to collateral in a foreign country that is secured under a loan agreement. This also covers the inability to convert or transfer funds outside a foreign country after the sale of the collateral.

Repossession of Leased Aircraft Protects an Insured (usually a finance company) against the right to repossess an aircraft in a foreign country when such repossession is allowable under the terms of a lease agreement. Also covers the failure of the aircraft to be de-registered.

Maquiladora Investment Protection Protects an Insured with a maquiladora investment in Mexico against confiscation of their investment. Also includes coverage for embargo of products going into or coming out of the foreign country, as well as malicious property damage.

OPIC Wraparound Insurance This is designed to enhance the CEN and Contract of Lenders insurance offered by OPIC and other public agencies. Some of the enhancements include coverage for partial losses resulting from a confiscation, forced abandonment, business interruption, and expropriation of goods in transit countries.

POLITICAL RISKS: CONTRACT FRUSTRATION - BASED COVERAGES

Contract Frustration for Public Buyers This coverage is frequently used in credits guaranteed by public sector entities, such as ministries of finance or government-owned banks. It is also used to protect an Insured against the unilateral termination of sales or service contracts, or the failure of government-owned buyers to meet contractual payment obligations, such as the short- or medium-term promissory notes or guarantees referred to previously. Also covers other specified political risks such as export or import license cancellation and embargo. Some insurers refer to this coverage as Contract Repudiation (CR).

Contract Frustration for Private Buyers Protects an Insured against transfer risk (the inability of a foreign private buyer to obtain foreign exchange to make payments to the Insured), as well as other specified political risks such as license cancellation and embargo. This covers non-payment of promissory notes and guarantees arising from political risks.

CF for Letters of Credit Protects an Insured against failure of a foreign bank (government or private) to honor its obligation under a letter of credit, presuming all documents are in order. The protection includes transfer as well as other defined risks.

On-Demand Bond Coverage (Fair or Unfair Calling of Guarantees) Covers an Insured against the risk of draws by a foreign buyer of bonds or standby letters of credit used as a bond in exchange for advance payments from customers or in other contract-related guarantees or surety