Vertical Optimization assists companies to secure insurance coverage which in many instances reduces the risk exposure to a lender in a given transaction and thus makes it easier for them to extend credit facilities.
Political risk insurance and export credit guarantees address two separate but related problems in a transaction. Typically the loan guarantee underpins the investment and reassures the lender going into the venture about the certainty of repayment, while political risk insurance typically protects the entrepreneur or equity holder and protects them against failure in the course of the venture as a result of violations of international law.
OPIC Political Risk Insurance
When potential investors (such as lenders) are concerned about the effects of political instability on your overseas investment, political risk insurance can help protect the investment. The Overseas Private Investment Corporation (OPIC) provides various policies to insure against property and income loss due to political violence, expropriation, terrorism, and currency inconvertibility, depending on the type of coverage.
Vertical Optimization, LLC is an OPIC originator for political risk insurance.
Applications for political risk insurance are often filed before or simultaneously with loan applications. The principal areas covered by OPICPRI include Political Violence, Expropriation, Standalone Terrorism, and Currency Inconvertibility. OPIC also has a program targeted to small businesses including exporters and firms involved in the oil-and-gas and non-oil and gas sectors. As an originator for PRI, Vertical Optimization can assist companies evaluate their needs and process the applications. OPICPRI does NOT require an OPIC loan application to be considered. In many cases, companies may obtain PRI coverage from OPIC while the financing is obtained from a different source.
Ex-Im Bank Export Credit Insurance
While OPICPRI tends to focus on “project finance”, EXIM tends to focus on “trade finance”. Clearly there is NOT a dividing line between these two since many investments overlap the two areas of interest. As an exporter of goods, you want to be sure you’ll get paid for the products you sell. Accepting an uninsured order from another country may prove to be a nerve-wracking ordeal, or simply too risky for your export finance lender. Commercial and political risk insurance mitigates the risk associated with exporting to foreign companies and governments.EXIM Bank offers export credit insurance to ensure exports against contract violations in an international transaction. The principal details include:
- Insurance covers losses due to:
Commercial reasons (such as insolvency or default) and
Political events (such as war, foreign exchange inconvertibility, etc.)
- Insurance covers:
100% of payments from sovereign buyers
90% of payments from private sector buyers
95% of letter of credit transactions
98% of bulk agricultural transactions
Coverage does not include confirmed letters of credit, cash-in-advance sales, and certain military and defense-related items.
- Export products must include 51% or more U.S. content (including labor, without markup).
- Coverage is applicable to repayment terms up to 180 days (depending on the product), or up to 360 days for certain qualifying transactions.
To obtain more information and to assure your profits when exporting abroad, call us at 1−202−370−6165 or send us an email.