Ver­tical Optim­iz­a­tion — Busi­ness Devel­op­ment & Tech­no­logy Deploy­ment Services

Polit­ical Risk And Trade Insurance

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 OPIC PRI 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. OPIC PRI 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 OPIC PRI 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:

Cov­er­age Details

- 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.