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Political Risk Insurance for Investments
Available in the following countries: Belgium.
Cover of investment by a Belgian company in a foreign company via equity/quasi-equity or via a structured loan from the Belgian company or a third party (e.g. a bank). Credendo – Export Credit Agency covers political risks (commercial risks are excluded).
Product benefits
- Prevents helplessness of the Belgian investor/foreign company when faced with political risks
- Flexible cover, adjustable to the specific needs of each investment
Mireille Janssens, Credendo – Export Credit Agency
“Credendo – Export Credit Agency offers a complete range of products to protect Belgian companies against risks abroad.”
Main characteristics
- Categories of investments are equity, structured loans and quasi-equity
- Credendo – Export Credit Agency covers a Belgian company investing in equity (or quasi-equity) in a company abroad
- Credendo – Export Credit Agency also covers a Belgian company or third party (e.g. a bank) financing this investment via a structured loan to a company abroad
- 6 covered events: expropriation, political violence, business interruption, currency inconvertibility and transfer restriction, award default, embargo
- Clearly defined compensation mechanism for each covered event
A Belgian company investing in equity (or quasi-equity) in a foreign company can ask for cover of the equity against political risks. In the same way, a Belgian company or third party granting a structured loan to a foreign company can ask for cover of the loan against political risks.
Credendo – Export Credit Agency covers a range of well-defined political risks in six potential events (commercial risks are excluded). An equity investment is capital invested in a foreign company, i.e. in a new subsidiary, a joint venture or shares acquired in a foreign company. A structured loan is financing provided by a Belgian company or third party (e.g. a bank) for such investment in a foreign company with a repayment schedule. Quasi-equity is a hybrid instrument with characteristics of both equity and structured loans, but with no predetermined repayment schedule.
Credendo – Export Credit Agency pays compensation for any loss principally caused by a covered event during the policy period.
Covered events:
- Expropriation
- Political violence (including terrorism)
- Business interruption (as a consequence of political violence damage)
- Currency inconvertibility and transfer restriction (no hard currency can be converted or transferred)
- Award default (regarding a contractual agreement between a foreign company and foreign authorities/public entities)
- Embargo (imposed by the foreign country)
Compensation mechanism:
- Book value approach for expropriation and political violence (in the case of final loss)
- Compensation of loss of income in the case of business interruption or embargo
- Compensation of loss of the amount that could not be transferred or reimbursed in the case of currency inconvertibility and transfer restriction
Pricing:
- Pricing is different for each type of investment
- Percentage of coverage is chosen for each covered event
- Premium is due on an annual basis
Why Credendo?
Credendo – Export Credit Agency offers a complete range of products to protect Belgian companies against risks abroad. As the official Export Credit Agency for Belgium, Credendo – Export Credit Agency complies with OECD rules concerning the structure of transactions and investments abroad as well as the regulated premium percentage.
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