Political & Credit Risks

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Political & Credit Risks focuses on the risks associated with cross-border trades and investments

When you trade or invest across borders, your balance sheet is at risk. In commodities, where pre-payment is common as a means of financing production and guaranteeing long-term supply, non-payment or non-delivery can have a devastating commercial effect. We help you protect yourself against these sorts of risks.

We also help you manage political risk. Foreign government actions like war, trade embargoes and expropriation [check] can affect your bottom line, costing you tens or hundreds of millions. They can even cause you to write off your investment completely. The longer your trade or investment agreement, the greater the uncertainty – and the more you need cover.

We arrange insurance coverage that protects you against political and counterparty risks in trade transactions. We work with commodity traders and the banks that finance them, as well as with equity investors who have subsidiaries or physical assets abroad. Clients include the leading banks, construction companies, international commodities traders,  industrial companies, miners, oil producers and exporters.

Our services

We’re more than an insurance broker – we’re a partner helping you protect your balance sheet.
 
We investigate the insurance market to find counterparties who’ll take on your political and trade credit risks at a premium you’re comfortable with.

We’ll advocate for you and negotiate hard on your behalf. As well as this, we’ll:

  • analyse your risk and identify areas where a government action may threaten your investment
  • study your contracts and recommend changes if needed to make them insurable
  • suggest ways to structure your risk to reassure underwriters, such as obtaining collateral or guaranties
  • get underwriters more closely involved with you and your risk to develop a true partnership
  • advise you on the best way to manage your risk, not just the best insurance to buy
     

Our team

The Lockton Political & Credit Risk broking team has extensive experience which enables for a better understanding of a clients needs, exposures and insight in to the most advantageous market for their requirements both in the UK and abroad.

 

 

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Case study

Trade Credit Insurance


When one of the UK’s largest oil companies wanted to sell its downstream chemical business, we used trade credit insurance to make the deal happen. Their buyer was heavily leveraged, but £500 million short of the sum needed to complete the purchase. With no more finance available, the deal was stalling. Studying the two businesses, we realised that ongoing supply relationships meant they would remain connected for years to come. So we recommended that the seller offered their buyer extended credit terms on these future trades, then used insurance to cover the risk of them defaulting. This created the extra working capital they needed. The deal went ahead.

Broking done differently

We're more than an insurance Broker
- We're independent specialist risk consultants

  • Find the right fit
    We will always ensure to understand your financial goals and position and use out know-how to create a broking or collateral strategy that fits your objectives.
  • Predict impacts on your business
    We combine detailed modelling and financial analytics to show you the effect of an insurance programme on your business and the risks you face.
  • Fight for you
    We are not afraid to challenge insurers to achieve the best result for you.
  • Keep up to date
    We keep up with developments in your industry, to make sure we understand your business.
  • Keep costs low
    Help risk financing come up with lowest cost or most suitable programme.
  • Global Expertise
    Lockton, Inc. is the world's largest privately held insurance brokerage firm.