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.
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:
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.
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.