Direct Investment Insurance

Atradius’ Direct Investment insurance protects you against the political risks of foreign investments.

Direct Investment insurance differs fundamentally from export credit insurance. In the case of export credit insurance, the obligation to make repayment or payment is fixed, irrespective of results that are achieved by the buyer. Direct investment, however, is characterised by the fact that the consideration (usually the dividend) depends on the results of the company in which the investment is made.

Risks insured

Direct Investment insurance offers cover for the following political risks:

• Expropriation
• Transfer restrictions
• War

On request, breach of contract risk can also be insured. This additional cover offers cover for losses resulting from either failure to comply with, or failure to recognise contracts that have been concluded with local governments in relation to the investment. Such contracts usually involve the supply of goods and/or services that, according to the law of the host country of the investment, only the local government can supply.

Insured sum

The insured sum of a share participation is its book value. This represents the block of shares the investor possesses in the company concerned. The insured sum of a loan the investor has provided, is the outstanding amount of the principal sum. During the term of investment, the insured sum can be adjusted to possible developments, so that it can be raised if the value of the investment increases. In case of loss or when a loan is paid off, the insured sum can also be marked down.

Revenues

Revenues, such as interest, dividends, royalties and other funds the investor is provided with by the company you are investing, are covered by the insurance for up to an annual maximum of 12% of the insured sum. This does not include redemption of the principal sum of a loan, nor repayment of the investment.

Maximum compensation

The maximum compensation is 200% of the initial value. The maximum compensation for loans is EUR 75 million and EUR 100 million for invested assets.

Uninsured portion and covered percentage

Of every covered claim the highest compensation will be the maximum covered percentage (90%). This implies that the investor or financier has an uninsured portion of 10%.

Term of the insurance

The full amount of the investment must be invested within a maximum period of five years. The term of the insurance has a maximum of 15 years, starting from the moment that the full amount of the investment has been invested.

Waiting period

There is a waiting period of generally six months before claims are being paid.

Premiums and charges

The application fee for direct investment insurance is 0.1% of the invested amount, subject to a minimum of EUR 450 and a maximum of EUR 4,500. If Atradius rejects the application, half of the fee will be refunded to you. Atradius will not be charging any costs when in the initial phase it is already clear that the application cannot be accepted.

An annual premium is due that is based on the reported amount by the investor/financier. The premium for an investment in a foreign currency is determined by its exchange rate that is applicable on the day of the beginning of the investment. The premium depends on the country you are investing in, and the extent of cover, and may vary between 0.65% and 1.1% in total per year depending of the risk of war, expropriation and transfer. The rates, however, will be raised if the investment exceeds EUR 50 million, equalling the portion of excess of EUR 50 million. When the policy is issued, the premium rate is fixed for the full term and charged annually on the value of the investment.

Announcement of intended investment

It is also possible to inform us in the early stages of an investment you intend to make, without having to apply for a cover at that moment. After receipt of your announcement, we will judge if an insurance application is possible. In the case of an approval, we will confirm this to you and register the investment (officially). This confirmation is without charge and does not involve a promise for cover or acceptance of the risk. Neither is there a commitment to apply for insurance. We will attend to a possible insurance application only if you decide to proceed with the investment within twelve months from the date of application. An investment, however, can only be qualified for a cover if we have received the application within three months from the start/onset of the investment.