POLITICAL RISK INSURANCE - The Global Clearinghouse

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POLITICAL RISK INSURANCE FOR FINANCIAL INSTITUTIONSAND CAPITAL MARKETSWith Political Risk Insurance from AIG Global Trade & Political Risk Insurance Company (AIG Global), financialinstitutions and investors in international debt that are exposed to cross-border risk can benefit from protection froman insurance organization recognized for its exceptionally strong balance sheet.Do you have a great deal in a difficult country?OUR CLIENTS …AIG Global is a widely accepted and highly regarded counterpartyfor financial institutions and investors that are active in emergingmarkets. We work together with our clients—U.S. and foreign-basedcommercial banks, investment banks, leasing companies and financialservice arms of manufacturing and service companies—to structureinsurance policies which may allow investors and financial institutionsto:♦ increase capacity for international business♦ manage provisioning requirements♦ offer clients attractive financing terms♦ expand distribution capabilities♦ mitigate country risksTHE TRANSACTIONS WE INSURE …♦ limited recourse projectfinance loans♦ leases♦ working capital loans♦ trade finance loans♦ structured finance transactions♦ merger, acquisition orexpansion loans♦ bond issues♦ vendor/buyer finance♦ refinancing♦ letters of creditCASE SCENARIOA European financial institution won the mandate to arrangea syndicated working capital facility for its client—aColombian food processor. However, faced with countrylimit constraints and costly provisioning requirements, thearranger, on behalf of itself and all syndicate participants,came to AIG Global for support. Within just 5 workingdays, AIG Global issued a Political Risk Insurance policycovering the entire facility and the loan was disbursed. Thepolicy provided sufficient risk transfer to make the riskacceptable to the lenders at a cost affordable to the borrower.♦ parent/subsidiary or branchfunding loans♦ asset-based loans♦ hedge facilities♦ mortgages♦ asset securitizationsFLEXIBLE COVERAGE …Our Political Risk Insurance gives financial institutions flexibilityto structure coverage to meet their unique requirements. Financialinstitutions may secure Political Risk Insurance for their ownloans or on behalf of other banks to facilitate loan syndication ordistribution of risk to investors. Policies can designate a financialinstitution or trustee as the insured, co-insured or loss payee asdictated by the transaction structure. Coverage is available forprincipal only or for principal and interest.THE RISKS WE COVER …For Transactions with Private Sector Obligorsand State-Owned EnterprisesConfiscation, Expropriation and Nationalization —government acts that cause the interruption of scheduled loanpayments or deprive lenders of fundamental creditor rightsfollowing a missed paymentCurrency Inconvertibility or Non-Transfer — governmentcontrols that prevent the purchase or transfer of hard currencyfor loan repaymentPolitical Violence — politically motivated acts of violence,including terrorism, war and civil war, that result in theinterruption of scheduled paymentsCoverage can be expanded to include other political perils as required.For Transactions with Public Sector Obligorsand State-Owned EnterprisesNon-Honoring of a Promissory Note or a SovereignGuarantee — failure of a sovereign entity to honor paymentobligations under a promissory note, bond, sovereign loan orsovereign guaranteeNon-Honoring of a Letter of Credit — failure of a sovereignentity to honor payment obligations under a letter of creditSubstantial Capacity WorldwideFor Private Sector Obligors: Lenders can be indemnified for upto $120 million per transaction and up to 15 years. Coverage isavailable for up to 100% of each transaction.For Public Sector Obligors: Lenders can be indemnified for upto $120 million per transaction and up to 15 years. Coverage isavailable for up to 95% of each transaction.Higher limits may be available on a case-by-case basis.To learn more, visit AIG Global’s Web site at http://aigglobal.aig.com or contact your local AIG Global office.The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies and services described. Please refer to the actual policies and services forcomplete details of coverage and exclusions. Insurance is underwritten by members of American International Group, Inc. and is subject to underwriting review and approval. Coveragemay not be available in all jurisdictions.78548 AMS 0M 7/08

POLITICAL RISK INSURANCE FOR EQUITY INVESTORSAIG Global Trade & Political Risk Insurance Company (AIG Global) provides insurance to protect against loss ofoverseas assets and investments that result from specific political perils. This protection enables investors to realizethe full upside potential of their foreign investments while mitigating exposure to often catastrophic and unforeseenpolitical events.Chairman to CEO: “These countries seem likegood places for our company to make investments.But what if that changes?”OUR CLIENTS …AIG Global assists global companies in managing their internationalexposures. Our clients—manufacturers, project developers,contractors and service firms included—look to AIG Global forpolitical risk solutions. Whether a company is entering an overseasmarket for the first time or is an experienced multinational withextensive international activity, AIG Global can design a politicalrisk insurance program that makes sense.THE ASSETS AND INVESTMENTS WE INSURE …♦ equity in overseas subsidiaries or joint ventures♦ loan repayments, intra-company fees or profit distributions♦ property, inventory or equipment located abroad♦ equipment leased abroadCASE SCENARIOA European electronics components manufacturer with 85%of its income generated from overseas operations, approachedAIG Global for help in managing its huge overseas exposure.AIG Global responded by issuing a single Political RiskInsurance policy covering potential losses to the company’sassets and income in over 30 countries. The 5-year policy isnon-cancelable and the premium rate is fixed, giving thecompany long-term security at a predetermined cost. Thepolicy is also flexible—allowing for periodic adjustments tolimits over the policy period to reflect fluctuations in exposure.FLEXIBLE COVERAGE …AIG Global designs programs to meet the specific needs ofeach insured. Political Risk Insurance policies can cover asingle investment or a portfolio of investments, in one countryor in many.THE RISKS WE COVER …Confiscation, Expropriation and Nationalization —government confiscation, expropriation or nationalization ofan enterprise that results in loss of investments or assetsCurrency Inconvertibility or Non-Transfer — governmentcontrols that prevent the purchase or transfer of hard currency fordividend payments, loan repayment or other remittancesPolitical Violence — politically motivated acts of violence,including terrorism, war and civil war, that result in physicaldamage to propertyPrograms can be enhanced to address losses due to anumber of other specialized risks, including:Forced Abandonment or Forced Divestiture — complete abandonmentof a foreign investment as a direct consequence of politicalviolence or permanent divestiture of all or part of the insuredinvestment at the direction of the insured’s governmentExport or Operating License Cancellations — cancellation ofa valid export or operating license by the host governmentBusiness Interruption — loss of projected net profit resultingfrom an act of expropriation or political violenceSubstantial Capacity WorldwidePolicyholders can be indemnified for up to $120 million percountry, with terms of up to 15 years. Higher limits may be availableon a case-by-case basis. Coverage is available for up to 100% ofinvestment value.To learn more, visit AIG Global’s Web site at http://aigglobal.aig.com or contact your local AIG Global office.The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies and services described. Please refer to the actual policies and services forcomplete details of coverage and exclusions. Insurance is underwritten by members of American International Group, Inc. and is subject to underwriting review and approval. Coveragemay not be available in all jurisdictions.78549 AMS 0M 7/08

POLITICAL RISK INSURANCE FOR CONTRACTORSMany construction and engineering companies have large overseas financial exposures. AIG Global Trade & PoliticalRisk Insurance Company (AIG Global) offers Political Risk Insurance to protect these contractors against politicalrisks which could adversely affect profitability.WE INSURE AGAINST …Wrongful Calling of GuaranteesA legitimate concern of contractors operating overseas is thewrongful calling of unconditional and irrevocable guarantees. AIGGlobal’s Wrongful Calling of Guarantee Insurance helps protectcontractors against unexpected losses which may result from thecalling of a bond or guarantee due to no fault of the insured.Insured events include:♦ arbitrary and unfair calling of a guarantee by agovernment sector obligor♦ legitimate calling of a guarantee due to actions by eitherthe foreign government or the contractor’s government♦ calling of a guarantee due to the outbreak of war, revolutionor insurrection♦ non-honoring of an arbitration award when the contractorhas obtained an arbitration award in its favorCoverage can be arranged for various types of guarantees, includingon-demand bid bonds, performance bonds and advance paymentguarantees. We can insure individual bonds or portfolios of bonds.Losses of Plant and EquipmentLosses of plant and equipment represent another major threat tocontractors operating overseas. Comprehensive Contractors Plantand Equipment Insurance (CCPE) can be arranged to addresslosses of a contractor’s physical assets due to:Expropriatory Acts — confiscation, expropriation, nationalizationor requisition by the host country government that deprives theinsured of the use or possession of its propertyDeprivation — inability to obtain an export license from theappropriate authority in the host country for the export of propertyor equipment outside of the host countryForced Abandonment — complete abandonment of property byorder of the contractor’s government to evacuate personnel fromthe host countryPolitical Violence — politically motivated acts of violence,including terrorism, war and civil war, that result in physicaldamage to equipmentCASE SCENARIOA mid-sized contractor with millions of dollars worth ofequipment deployed overseas was worried about the extentof its foreign exposure. Political violence could result indamage to the contractor’s equipment or the need to evacuateand abandon equipment. The contractor was also concernedthat government restrictions could make it impossible toget equipment out of a country once a job was completed.Because these risks were not covered by the company’sproperty policies, the contractor had to find another sourceof insurance. Management wanted a broad, flexible insurancepolicy that required minimal administration.AIG Global responded by issuing a CCPE policy. The policycovers all of the company’s equipment in high-risk countriesand provides flexibility to adjust the amount of coverage ineach country as equipment is transferred from one overseaslocation to the next.Substantial Capacity WorldwideWrongful Calling of Guarantee Insurance can indemnifycontractors for up to $120 million in any one country, with termsof up to 10 years. Contractors can obtain coverage for up to 95%of the value of each bond or guarantee.Comprehensive Contractors Plant and Equipment Insurancecan indemnify contractors for up to $120 million per country, fora policy term of up to 15 years. Coverage is attainable for a full100% of asset value. Waiting periods range from 180 to 360 days.Higher limits may be available on a case-by-case basis.Is your business exposed to political risks? Whowill you call if you have a problem?To learn more, visit AIG Global’s Web site at http://aigglobal.aig.com or contact your local AIG Global office.The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies and services described. Please refer to the actual policies and services forcomplete details of coverage and exclusions. Insurance is underwritten by members of American International Group, Inc. and is subject to underwriting review and approval. Coveragemay not be available in all jurisdictions.78551 AMS 0M 7/08

POLITICAL RISK INSURANCE FOR IMPORTERS AND EXPORTERSInternational trade transactions can be disrupted by political perils such as embargo, license cancellation or governmentacts that frustrate completion of a contract. AIG Global Trade & Political Risk Insurance Company (AIG Global) workswith importers and exporters to structure insurance policies which can offer protection against political risks in the marketswhere they do business.You trust your foreign customer … Do you trustyour customer’s government?THE CONTRACTS WE COVER …AIG Global Political Risk Insurance can be tailored to protectimporters and exporters against political risks which may interferewith the fulfillment of a contract—whether the contract is forcapital goods, spare parts, commodities or services. Political risk eventsoccurring before, during or after shipment of goods or provision of servicescan be covered.CASE SCENARIOA prominent supplier of telecom equipment was competingfor a large contract with a leading Latin American providerof integrated wireless communications services. The supplierwas confident that it could meet the technical specificationsof the bid, but was unable to offer competitive financingwithout country risk mitigation. With an AIG GlobalPolitical Risk Insurance policy in place, the supplier wasable to secure the bank support needed for the transaction,provide the required financing terms and complete the sale.Substantial Capacity WorldwideCoverage can indemnify importers and exporters for up to $120million per transaction, with a policy term of up to 15 years.Higher limits may be available on a case-by-case basis. Insurance isavailable for up to 95% of contract value, with waiting periodsranging from 180 to 360 days.THE RISKS WE INSURE …For Transactions with Private Sector CounterpartiesConfiscation, Expropriation, and Nationalization —government expropriatory acts or selective discrimination againstthe contract counterpartyCurrency Inconvertibility or Non-Transfer — governmentcontrols that prevent the purchase or transfer of hard currencyfor payment under a contractNon-Honoring of an Arbitration Award — governmentalactions that result in default of the counterparty’s obligation topay the insured an arbitral awardPolitical Violence — terrorism, war, civil war, rebellion, revolution,insurrection, civil commotion or other like disturbancewhich prevents the counterparty from fulfilling contract termsGovernment Act, Law, Decree or Regulation — an act, law,decree, regulation or embargo by the host government thatprevents fulfillment of the terms of the contractInability to Import or Export — illegal cancellation of an importor export license by the host governmentDiversion of Voyage — additional transport or insurance chargescaused by interruption or diversion of a shipment outside thecountry of exportation due to war or embargoFor Transactions with Public Sector CounterpartiesNon-Payment by a Sovereign Buyer — failure of a governmentobligor or a state-owned enterprise to honor its payment obligationsunder a purchase contract whether such payment obligations aredenominated in hard currency or local currencyNon-Delivery by a Sovereign Supplier — failure of a governmentobligor to deliver under a sales contractNon-Honoring of a Sovereign Guarantee — failure of a governmentguarantor, such as the Ministry of Finance, Central Bank ora government owned bank, or a state-owned enterprise, to honorits payment obligations under a guarantee issued in support of atrade contract whether such payment obligations are denominatedin hard currency or local currencyTo learn more, visit AIG Global’s Web site at http://aigglobal.aig.com or contact your local AIG Global office.The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies and services described. Please refer to the actual policies and services forcomplete details of coverage and exclusions. Insurance is underwritten by members of American International Group, Inc. and is subject to underwriting review and approval. Coveragemay not be available in all jurisdictions.78552 AMS 0M 7/08

POLITICAL RISK INSURANCE & AIG WORLDRISK ®To meet the needs of small and medium sized companies, a streamlined political risk insurance policy can be purchasedon its own or as part of a comprehensive international insurance package through AIG WorldRisk ® . Within thisfacility, the political risk program offers coverage for business owners with assets abroad or importers and exporters buyingand selling goods in foreign countries. The insurance indemnifies the policyholder up to the policy limits for any onecountry. It is now quick, easy and affordable for small and medium sized companies doing business abroad to be coveredagainst political risk exposures.THE RISKS WE COVER …For Business Owners or InvestorsWorldRisk—Confiscation, Expropriation, and NationalizationThis coverage protects the policyholder against losses caused by thetotal or partial confiscation, expropriation or nationalization of theirassets or investments in the foreign country. Policies can cover:♦ Permanent Investments — the policyholder’s equity investmentin a foreign country; and/or♦ Mobile Property, Inventory and Production Equipment —the replacement cost or book value of property, inventory, orequipment located abroad.AIGYour business has gone global. Let us help yourcompany manage the risks associated with operatingin foreign markets as your business expands.OBTAINING POLITICAL RISK COVERAGE …Call your local WorldRisk representative. They will forward youour quick and simple Political Risk application and will alsoanswer any questions you might have.For Importers and ExportersWorldRisk—Embargo and License CancellationThis coverage protects the policyholder against losses caused bygovernmental actions that prevent fulfillment of a contract due toembargo, license cancellation or the imposition of a governmentact, law or regulation. This coverage protects importers andexporters against these risks when they are dealing with privatelyowned counterparties abroad.POLICY ATTRIBUTES• 90% Indemnity• 180-day Waiting Period (applicable to Embargo andLicense Cancellation only)• Simple Claims Procedure — Written Proof of LossStatement submitted to AIG within 12 months of theend of Waiting Period with Notice provided within15 days• Multi Country Programs — Policies can include oneor more countries to protect the client’s total foreignexposure• Up to $500,000 of PRI coverage — WorldRiskcustomers can be indemnified for up to $500,000 pertransaction (Higher limits may be available on a case-bycasebasis)MORE ON WORLDRISK PACKAGES …The WorldRisk Foreign Commercial Policy is a package of internationalinsurance products grouped together to provide manyof the necessary insurance coverages needed to protect companiesand their employees against risks associated with doing businessoverseas.Along with Political Risk Insurance, the following are examples ofadditional WorldRisk coverages you may want to consider:1. Foreign Commercial General Liability (including products thatcover suits brought overseas and in the U.S. or Canada forforeign occurrences)2. Foreign Voluntary Workers’ Compensation/Employers Liability3. Foreign Travel Accident & Sickness (with assistance services)4. Foreign Business Auto (owned, hired, or non-ownedautomobiles–excess of compulsory)5. Foreign Commercial Property (real & personal property,business interruption, property at exhibition)6. Marine Ocean Cargo7. Foreign Commercial Crime8. Corporate Kidnap & Ransom/ExtortionTo learn more about Political Risk, visit http://aigglobal.aig.com and to learn more about AIG WorldRisk, visithttp://www.aigworldsource.com or contact your local marketing representative.The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies and services described. Please refer to the actual policies and services forcomplete details of coverage and exclusions. Insurance is underwritten by members of American International Group, Inc. and is subject to underwriting review and approval. Coveragemay not be available in all jurisdictions.93688 AMS 0M 7/08

CONTACTSThe AmericasNew YorkAIG Global Trade & Political Risk175 Water Street, 14 th FloorNew York, NY 10038Fax: +1-212-458-5031Harry PalumboStephen KayRashmi NehraFrancisco Cuevas+1-212-458-3567+1-212-458-3620+1-212-458-3681+1-212-458-3610harry.palumbo@aig.comstephen.kay@aig.comrashmi.nehra@aig.comfrancisco.cuevas@aig.comChicagoAIG Global Trade & Political Risk300 S. Riverside, Suite 2100Chicago, IL 60606-6613Fax: +1-312-993-0126Janet Shore+1-312-930-1644janet.shore@aig.comSan FranciscoAIG Global Trade & Political RiskWest Coast Regional Office2 Rincon Center121 Spear StreetSan Francisco, CA 94105Fax: +1-415-836-3116Sean DunphyNicholas Garofalo+1-415-836-2855+1-415-836-2965sean.dunphy@aig.comnicholas.garofalo@aig.comTorontoAIG Global Trade & Political Risk145 Wellington Street WestToronto, Ontario M5J 1H8Fax: +1-416-596-6319Alison Ramsay+1-416-596-2770alison.ramsay@aig.comEurope, Africa & The Middle EastLondonAIG UK Limited58 Fenchurch Street, 8 th FloorLondon, EC3M 4ABEngland, United KingdomFax: +44-207-954-8872Ray AntesNicholas RobinsonMaggie NicolSam OuinRuth Zahn+44-207 954-8832+44-207 954-8282+44-207 954-8940+44-207 954-8239+44-207 954-8544ray.antes@aig.comnicholas.robinson@aig.commaggie.nicol@aig.comsam.ouin@aig.comruth.zahn@aig.comAustraliaSydneyAIG AustraliaCitigroup Centre2 Park StreetSydney, NSW 2000, AustraliaFax: +61-2-9240-1875Keith Paul+61-2-9240-1728keith.paul@aig.comJapanTokyoAIU Insurance CompanyAIG Tower2-4-1 Kinshi, Sumida-ku, 16 th FloorTokyo, Japan 130-8560Fax: +81-3-3624-7912Yoshihiro Suchi+81-3-5619-3394suchi.yoshihiro@aig.co.jpAIG Greater China LimitedAIG TowerNo. 1 Connaught Road, 13 th FloorHong Kong, ChinaChristopher Shortell852-2832-6369christopher.shortell@aig.com78546 AMS 0M 9/08