Credit and Political Risk

On a seemingly daily basis, the news is filled with stories about the unstable and ever-changing nature of global economies, governments, and corporations. We are all operating in an era of increasing risk from both the scale and velocity of change.

Managing a disparate range of geopolitical risks is among one of the key challenges facing international businesses. Political and economic risks, terrorism, political violence, kidnapping and extortion can all impact balance sheets, brands and ultimately, reputation.

Our collective focus is to help clients prepare for these credit, political and security risks by offering advice on risk and structure solutions to enable global trade and investment.

Kidnap & Ransom

This type of insurance protects not only against the financial loss suffered by businesses and their employees in kidnappings and extortion situations, but it also secures access to advice and services from the worlds’ foremost security consultants.

The services include preventive measures as well as risk management and damage control should a disaster occur. The security consultant steers negotiations with the kidnappers or blackmailers in the event of a claim.

Kidnapping, extortion, unlawful detention, hijacking and emergency evacuation from vulnerable areas (Emergency Repatriation) are included in the insurance programme.

JLT Specialty has a long experience in Kidnap and Ransom insurance and besides having negotiated qualified insurance solutions in the Nordic Countries we also have a solid experience in a number of claims settlements.

Confiscation

JLT Specialty has a profound knowledge of insurance for confiscation. In the Nordic region, there is a large number of multinational companies that have assets in politically unstable countries. Insurance for confiscation covers confiscation, expropriation, nationalisation, selective discrimination, forced sales, war and terrorism. Real estate as well as mobile assets can even be insured in countries with notable political turmoil. Our clients are mainly international companies with assets in conflict-prone countries and regions.

Customer Credits

JLT Specialty offers professional expertise when procuring and improving insurance contracts as well as claims handling of customer credit insurance. Customer credit insurance allows the policyholder to increase sales and the financial exposure towards customers without putting themselves at higher financial risk.

The insurance covers against a customer’s inability to fulfill financial commitments due to insolvency or bankruptcy. Our clients are often international Nordic companies with significant sales outside the OECD.

The three main types of customer credit insurance are:

  • Traditional credit insurance (Whole Turnover), which means a company’s total sales are included and guaranteed from the ground up (i e. from the first dollar)
  • Emergency Protection (Excess of Loss), Where the insurer covers all or selected parts of a company’s turnover. The insured takes a first threshold (self retention) resulting in a lower premium
  • Insurance for a number of key customers (Key Account Cover). This type of insurance solution typically contains the 15-25 largest customers

Structured Credit Insurance and Financial Solutions

JLT Specialty is the leading broker within the Nordic region of structured insurance and reinsurance solutions for credit and political risk. With focus on the insurance markets in London and Bermuda and to some extent in New York JLT Specialty place insurance for multinational and governmental institutions for export credit guarantees, banks and exporting firms. We provide solutions for both individual risks and structured loan portfolios or other assets with varying maturities.

The private insurance market often work alongside the banking market and/or EKN and works perfectly as a compliment or substitute to traditional banking solutions for businesses and institutions.

With new market requirements and regulations and financial markets converging, improved and competitive products and instruments emerge frequently on the insurance, banking and finance markets.

JLT Specialty can often optimize solutions to customers through this competition/convergence and help ensure that financial solutions for exposures are supervised from several angles. To assist our customers further we also have expertise in financing, financial modelling, business development (in which insurance can increase the revenue base) and legal structures (captive, protected cell company etc).

As for Capital Risks we work closely with our colleagues worldwide to develop products and conditions and continuously work on the insurance market in order to meet the special requirements that our customers may have.

Unconditional Guarantee

Exporting companies that offer and/or enter into a contract with buyers who demand an unconditional warrant (On-Demand Guarantee) run the risk of a guarantee being called on without grounds of fact. The guarantee is designed to absorb the risk from the insured as well as the risk of the On-Demand Guarantee being called on in the event of war or import/export embargos (political risk).

These guarantees are commonly referred to as safeguards or: Tender Guarantee, Advance Payment Guarantee, Performance Guarantee, Retention Guarantee and Maintenance Guarantee.

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