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 with our political and credit risk insurance team.

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Political and Credit Risks

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We focus 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 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.

What we cover

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 Political & Credit Risk Insurance Team

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Russell Winter

Partner
russell.winter@lockton.com
+44 207 933 2149

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Peter Hornsby

Partner
peter.hornsby@lockton.com
+44 207 933 2190

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Demand for transactional risk insurance remained strong throughout 2023-24. Despite heightened geopolitical tensions, the UK M&A market has posted a steady recovery from its sluggish 2023, fuelled by growing economic certainty and investor confidence.

These trends are borne out in the success of Lockton’s UK transactional risks team, which placed policies for transactions with an aggregate value of £14bn in the last year, up from £13.2bn in the prior year. This masks a contradictory trend, however, with a 3% decrease in the average transaction value over the last 12 months. Taken within the context of a resurgence of M&A megadeals, such results indicate a growth in the utilisation of transactional risk insurances on the acquisition of SMEs, due to the near-unprecedented low ratings environment.

Notably, buy-side appointments continue to outweigh sell-side appointments for buy-side policies. This is a missed opportunity for the sell side: if the sell side were to appoint their broker, rather than leaving this as a decision for the buy side to make, this would likely give the sell-side greater leverage to shape the agreed policy terms, meaning they will ultimately reduce recourse to themselves.Demand for transactional risk insurance remained strong throughout 2023-24. Despite heightened geopolitical tensions, the UK M&A market has posted a steady recovery from its sluggish 2023, fuelled by growing economic certainty and investor confidence.

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