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Investment insurance (1)

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As a rule, outward investment indicates complicated and time consuming projects, during which investors are exposed to risks quite different from the risks inherent in the domestic market. – PowerPoint PPT presentation

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Title: Investment insurance (1)


1
Investment Insurance
2
As a rule, outward investment indicates
complicated and time consuming projects, during
which investors are exposed to risks quite
different from the risks inherent in the domestic
market. These risks are a sign of force majeure
and are not under control of the investor
nevertheless they can severely jeopardize the
existence and performance of the investment (war,
civil unrest, natural catastrophes,
expropriation, conversion restrictions etc.).
3
  • Advantages of such an insurance policy are
  • sharing of risks outside of investor's
    influential area,
  • facilitated entry into risky foreign markets,
  • a long-term obligation of SID Bank for insurance
    even in case of worsened situation in the host
    country,
  • possibility of favourable long-term financing,
  • many Bank participation in preparation of
    investment project and advising in the selection
    of instruments of insurance against risks,
  • mediation in case of complications and disputes
    with the host country of the investment,
  • repayment of claims
  • Forms of investment eligible for insurance

4
  • equity funds invested by investor in investment
    company or other movable or immovable property,
    which are expressed in monetary value and are the
    investor's contribution into the investment
    company,
  • shareholder's loan granted by a parent company
    to its subsidiary/investor, with a 5-year or
    longer repayment period, and
  • non-shareholder's loan funds/loan granted by a
    financial institution to investment company with
    a majority ownership share of a Slovene investor.
  • Equity insurance and insurance of shareholder's
    loan
  • Equity insurance is insurance of funds invested
    by a Slovene investor into the project company
    abroad. This can include founding of a new
    company (including joint investments), purchase
    of an existing company or increase in capital of
    a company. The investor can also invest funds in
    the form of long-term loan (shareholder's loan).

5
  • Insurance policy usually covers a "package" of
    risks, with an option of custom-made choice of
    insurance coverage with regard to type of risks
    as well as coverage level of each risk. This is a
    90 coverage, where 10 stands for own share of
    the investor (meaning that the policy holder to
    assumes the risk amounting to 10 of sum
    insured).
  • Sum insured is the amount of investment the
    investor wants insured. Investor can include in
    insurance just a portion of investment, as
    a current sum insured. The portion of investment
    not included in the first period of insurance, or
    for including future undistributed profits, can
    be included in the insurance in the form
    of reserved sum insured, for which the policy
    holder pays only a portion of premium charged for
    the current sum insured.
  • Insurance of non-shareholder's loan
  • When issuing a non-shareholder's loan, SID Bank
    insures funds/loan granted by a financial
    institution to the investment insurance company
    with a majority ownership share of a Slovene
    investor.

6
  • Risks
  • The investors can insure their investments at SID
    Bank against the following non-commercial risks
  • war and civil unrest,
  • expropriation and other forms of dispossession,
  • conversion and/or currency transfer restrictions,
  • termination of agreements by the host country of
    the investment,
  • refusal of protection of the law,
  • natural catastrophes.
  • Financial institutions can insure their
    non-shareholder's loan to Slovene investment
    company abroad also against commercial risks of
  • debtor's insolvency,
  • failure of repayment of a loan.
  • source http//www.sid.si/credit-and-investments-
    insurance/investment-insurance

7
Thank You..!!
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