Symposium Panelists and Participants
Total Page：16
File Type：pdf, Size：1020Kb
international41449 political Public Disclosure Authorized risk management Public Disclosure Authorized NEEDS OF THE PRESENT, CHALLENGES FOR THE FUTURE Public Disclosure Authorized Theodore H. Moran, Gerald T. West, and Keith Martin, Editors MIGA THE WORLD BANK GROUP Multilateral Investment Guarantee Agency Public Disclosure Authorized International Political Risk Management Needs of the Present, Challenges for the Future International Political Risk Management Needs of the Present, Challenges for the Future Theodore H. Moran, Gerald T. West, and Keith Martin, Editors THE WORLD BANK Washington, D.C. © 2008 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved. 1 2 3 4 10 09 08 07 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judge- ment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202- 522-2422; e-mail [email protected]. ISBN: 978-0-8213-7001-8 eISBN: 978-0-8213-7002-5 DOI: 10.1596/978-0-8213-7001-8 Library of Congress Cataloging-in-Publication data Needs of the present, challenges for the future / Theodore H. Moran, Gerald T. West, and Keith Martin, editors. p. cm. -- (International political risk management; v. 4) Includes bibliographical references and index. “Based on a symposium held November 5, 2006, under the joint auspices of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group and the Karl F. Landegger Program in International Business Diplomacy at the School of Foreign Service, Geogetown University”--Preface. ISBN 978-0-8213-7001-8 1. Insurance, Investment guaranty. 2. Risk (Insurance) 3. Risk management--Political aspects. I. Moran, Theodore H., 1943- II. West, Gerald T. 1944- III. Martin, Geral Keith. IV. MIGA-Georgetown University Symposium on International Political Risk Management (2006 : Georgetown University) HG4538.5.N44 2007 368--dc22 2007034298 Cover design: Serif Design Group, Inc. Contents Preface ix Abbreviations xiii Introduction xvii Yukiko Omura, Executive Vice President, Multilateral Investment Guarantee Agency Part One NEW PERSPECTIVES ON POLITICAL RISK INSURANCE PRODUCTS Overview 3 Theodore H. Moran and Gerald T. West, Editors A BIT of Insurance 7 Kenneth W. Hansen, Chadbourne & Parke LLP The Convergence of the Terrorism Insurance and Political Risk Insurance Markets for Emerging Market Risk: Why It Is Necessary and How It Will Come About 13 Charles Berry, BPL Global Commentary 37 David Neckar, Willis Commentary 41 Edie Quintrell, OPIC Discussion of New Perspectives on Political Risk Insurance Products 45 Symposium Panelists and Participants v vi Contents Part Two PRIVATE POWER PROJECTS IN EMERGING MARKETS: NEW MODELS FOR FINANCING AND RISK MANAGEMENT Overview 53 Theodore H. Moran and Gerald T. West, Editors Managing International Political Risk: Lessons from the Power Sector 59 Erik J. Woodhouse, Program on Energy and Sustainable Development, Stanford University AES’s Experience in Developing Countries 87 Jeffery A. Safford, AES Commentary 93 Barry Metzger, Baker & McKenzie LLP Discussion of Private Power Projects in Emerging Markets: New Models for Financing and Risk Management 97 Symposium Panelists and Participants Part Three THE CHALLENGE OF MANAGING REGULATORY RISK Overview 107 Theodore H. Moran and Gerald T. West, Editors Regulatory Takings Under International Law: A Brief Legal and Practical Guide 115 Peter Charles Choharis, Principal, Choharis Global Solutions Are You in Good Hands with Your Insurance Company? Regulatory Expropriation and Political Risk Insurance Policies 137 Mark Kantor, Attorney, Washington, DC A Sword in a Stone: Problems (and a Few Proposed Solutions) Regarding Political Risk Insurance Coverage of Regulatory Takings 171 Frederick E. Jenney, Morrison & Foerster LLP, Washington, DC Discussion of the Challenge of Managing Regulatory Risk 189 Symposium Panelists and Participants Contents vii Part Four THE INTERNATIONAL POLITICAL RISK INSURANCE INDUSTRY IN 2010 Overview 195 Theodore H. Moran and Gerald T. West, Editors Past and Future Predictions for the Political Risk Insurance Industry 201 John J. Salinger, AIG Global Trade & Political Risk Insurance Company How Will the Political Risk Insurance Industry Evolve in the Next Three to Five Years? 209 Christina Westholm-Schröder, Sovereign Risk Insurance Ltd. Looking Ahead: Will Political Risk Insurance Continue to Play a Meaningful Role in the Global Investment and Trade Environment? 215 Joanne Palmer, Director of Political Risk Insurance, Export Development Canada The New Scramble for Commodities: Medium-Term Trends in Political Risk Insurance 225 Greg Ansermino, Director, Standard Bank of South Africa Einstein and Cinderella 239 Julie Martin, Senior Vice President, Political Risk, Marsh Discussion of the International Political Risk Insurance Industry in 2010 245 Symposium Panelists and Participants Appendixes I Biographies of Authors 249 II Previous Volumes in This Series 261 III More about MIGA 269 Boxes 1 General Property Insurance Market War Exclusion 24 2 Legal Definition of “Rebellion” 24 3 T3 Act of Terrorism or Sabotage 25 4 T3 War Risks Exclusion 25 Figures 1 Lloyd’s Premium Income for Investment Insurance by Year of Account (Risk Code PR) 15 viii Contents 2 Ten-Year Overview of Lloyd’s Premium Income for Stand-Alone Political Violence (Risk Codes TO WL TE TU 6T) 16 3 Incurred of Loss Ratios for Lloyd’s Political Violence Risk Codes by Year of Account 17 4 Contract Performance versus Project Performance 67 Tables Annex 1 Project Details 85 1 OPIC Claims History 241 Preface International Political Risk Management: Needs of the Present, Challenges of the Future is based on a symposium held November 5, 2006, under the joint auspices of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group and the Karl F. Landegger Program in International Business Diplomacy at the School of Foreign Service, Georgetown University. This volume is the fourth in a series based on the biennial symposia. The 2006 event brought together 220 senior practitioners from all sides of the political risk insurance industry—insurers, bro- kers, investors, lenders, academics, and representatives of the legal community. As with its predecessors, this symposium elicited lively debate of the 15 papers presented, both from the commentators and the audience. Based on the comments and on their own further reflections, the authors revised their papers—in many cases substantially—for incorporation in this volume. For our part, the editors have sought to add value to the presentations in two ways. First, each part of the book contains an overview that synthesizes the main points made by the authors. Second, at the end of each section, readers will find an overview of the main points raised by the audience, as well as the responses and elaborations of the speakers. In this way, we hope to capture some of the richness of debate that has historically characterized these symposia. The main subjects discussed—providing coverage based on bilateral investment treaties (BITs), unifying terrorism and traditional political violence insurance, incorporating recent experiences in the power sector in risk management plans, and improving protection against regulatory takings—are at the core of investors’ concerns in the current marketplace. Despite the upsurge in foreign direct invest- ment (FDI) going into a fairly limited number of emerging markets, and notwith- standing the lack of major regional macroeconomic crises over the past five years, investors remain worried. First, events in Bolivia, Ecuador, and República Bolivariana ix x Preface de Venezuela have highlighted the resurgence of classic expropriation worries many thought had disappeared. Furthermore, regulatory takings at the national and subsovereign levels in various infrastructure subsectors, such as water and power, have caused numerous traditional investors in those areas to abandon or limit their exposure to developing countries. The dual threats of terrorism and civil conflict also continue to hang over many investors in a variety of regions. What connects