Linking Political Risk Insurance Pricing and Portfolio Management with Economic Capital Modeling: A Multilateral Perspective? Mikael Sundberg, Faisal Quraishi, and Sidhartha Choudhury
Providers of political risk insurance (PRI) may need to consider several objectives in their pricing decisions. As laid out in its convention, the primary mandate of the Multilateral Investment Guarantee Agency (MIGA) is to offer insurance against noncommercial political risks broadly in the categories of expropriation (EX), currency inconvertibility or transfer restriction (TR), war and civil disturbance (WCD), and breach of contract by a host government (BOC). As a mono-line investment insurer and a member of the World Bank Group, MIGA aims to open frontier markets by leading syndicated efforts together with other public and private PRI providers, takes The authors are responsible for the ongoing maintenance of MIGA’s risk and pricing models and provide MIGA’s underwriters with pricing indications. The descriptions in this chapter of MIGA’s models and general objectives are factual. Interpretations of the role of pricing in PRI and the industry itself are the opinions of the authors and should not be seen as representative of the management or Board of Executive Directors of MIGA or The World Bank Group, or its owners.
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