1. The GPRA Group
Rod Morris
Insurance Advisory Services
The 10 Most Common
Misconceptions about
Political Risk Insurance

2. About us
 Political and Trade Risk Analysis
 Insurance Advisory Services
 Micro Political Risk Data Modeling
 In-Country Support

3. Rod Morris
 Vice President and Managing Director
of Political Risk Insurance for Overseas
Private Investment Corp. (OPIC)
 Chief Regulator for Captive Insurance for
the State of Arizona
 Senior Vice President of CNA
International and Risk
Management Operations

4. Foreign direct investment risks
 Economic  Regulatory
 Social  Legal
 Operational  Currency
 Tax  Security

5. Not to mention…
Political Risk

6. Macro and micro risks
Breach of Expropriation
Contract
Regulatory National-
Change ization
Currency
Confiscation Transfer
War/Terror
/Civil Strife Protectionism

7. Political risks of most concern to investors
over the next 12 months (MIGA)
70%
60%
50% Regulatory Change
Breach of Contract
40%
T&C
Civil Disturbance
30%
Expropriation
20% Terrorism/War
MIGA Data
10%
0% 7

8. Foreign investor losses over the past 3
years
40%
35%
30%
Breach of Contract
25% Regulatory Change
T&C
20%
Civil Disturbance
15% Expropriation
War/Terror
10%
MIGA Data
5%
0%

9. Common Approaches to Dealing With
Political Risk
 Create joint venture or alliance with local
company
 Subscribe to sovereign risk reports
 Establish relationships with government
leaders
USEFUL BUT…
INSUFFICIENT

10. Typical PRI Coverage

11. Breach of Contract,
Agreement or
Concession

12. Nationalization
Confiscation
Expropriation
of Property

13. Currency Inconvertibility

14. Currency Inconvertibility
Wrongful Calling of a
Performance Bond

15. Denial of
Justice

16. Forced Divestiture

17. War
Terrorism
Civil Strife

18. Insurable investments
 Equity
 Consigned equipment
 Technical assistance
 Bank loans
 Capital markets
 Oil & gas natural resources
 Contractors and exporters

19. PRI Misconceptions

20. Loss From
Loss From Regulatory Change
Regulatory
Change

21. Terrorism
Defined

22. Fair Coverage

23. Property & Casualty
Vs.
Political Risk

24. Holes In Coverage

25. Equity Protection

26. Government
Assistance

27. Bad Debt

28. Expropriation claim
vs.
Investment recovery

29. Physical Taking
of Property

30. Recap
 PRI is insurance, not a guarantee
 Political risk can be mitigated but PRI is still evolving
and misunderstandings are common.
 Conduct independent political risk analysis
 Re-evaluate current policies annually
 Consult a professional, experienced advisor

31. Questions

32. Contact information
 The GPRA Group
 www.gpra-group.com
 info@gpra-group.com
 646 373 6277