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DeRuiter Consultancy - International Market and Investment SurveyorsDeRuiter Consultancy - A specialist company for the preparation and development of direct investments
A specialist company for the preparation and development of direct investments
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MIGA Investment Insurance

Despite its huge insurance portfolio of guaranteed projects, totalling US$ 17.4 billion in coverage, the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, is relatively little known among the increasing number of companies taking up global activities, particularly in developing nations.

In countries where political turmoil is escalating (Thailand, Pakistan, Venezuela) the risk of expropriation, sudden change of law at the expense of the investor, breach of (Government) contracts is a real possibility. For such circumstances, MIGA has great tools in place that no other insurer can match. MIGA, established in 1988, already offers political risk insurance for projects in a broad range of sectors in 147 developing member countries, covering all regions of the world.

Investors in today´s dynamic investment climate understand the potential benefits of investing in emerging markets. The even smarter ones also understand the critical importance of addressing the political risks that may accompany an investment in an untested environment. MIGA guarantees offer much more than just the assurance that losses will be recovered.

MIGA insures new foreign (cross-border) investments originating in any MIGA member country, destined for any developing member country. New investment contributions associated with the expansion, modernisation, or financial restructuring of existing projects are also eligible, as are acquisitions that involve the privatisation of state-owned enterprises.

Types of foreign investments that can be covered include equity, shareholder loans, and shareholder loan guarantees provided the loans have a minimum maturity of three years. Loans to unrelated borrowers can be insured, provided a shareholder investment in the project is insured concurrently or has already been insured. Other forms of investment, such as technical assistance and management contracts, and franchising and licensing agreements, may also be eligible for coverage.

In keeping with MIGA´s objective of promoting economic growth and development, investment projects must be financially and economically viable, environmentally sound, and consistent with the labour standards and other development objectives of the country hosting the investment.

MIGA prices its guarantee premiums based on a calculation of both country and project risk. Rates for the SIP guarantee (three coverages) range between (0.45%) and (1.75%) basis points per year.

Coverage is for up to 15 years (possibly 20 if justified by the nature of the project). MIGA cannot terminate the contract unless the guarantee holder defaults on its contractual obligations to MIGA, but the guarantee holder may reduce or cancel coverage on any contract anniversary date starting with the third.

Investors may choose any combination of the four types of coverage offered by MIGA. Equity investments can be covered up to 90 percent, and debt up to 95 percent. MIGA may insure up to $200 million, and if necessary more can be arranged through syndication of insurance (see also