SOURCE: Alliant Insurance Services, Inc.

Alliant Insurance Services, Inc.

March 18, 2011 08:00 ET

2011 Political and Economic Risk Ratings Released by Emerging Markets Group of Alliant Insurance Services

Global Macro Risk Ratings Report Includes 1,300 Ratings Covering Insurable Political and Economic Risks in 175 Countries

NEW YORK, NY--(Marketwire - March 18, 2011) - A comprehensive report rating the insurable political and economic risks in 175 countries has been released by the New York and Chicago-based Emerging Markets Group of Alliant Insurance Services (www.alliantinsurance.com), the nation's largest specialty insurance brokerage firm.

In addition to some 1,300 risk ratings -- including political risk ratings for 60 OPEC and non-OPEC oil- and gas-producing countries -- the 2011 Global Macro Risk Ratings report includes key trends regarding expropriation and sovereign issues.

According to Dr. Michel Léonard, chief economist and senior vice president for Alliant's Emerging Markets Group, the demand for systematic global macro data and analytics has increased "exponentially" since the beginning of the current recession.

"Badly hurt by the poor performance of traditional economic models and new regulatory disclosure rules, portfolio managers and executives made identifying the impact of sovereign risk on their strategies a cornerstone of delivering returns and outperforming benchmarks," he noted.

"The current events in the Middle East have brought political risk back to the fore of global investors and markets," he said. "In this year's risk ratings report, we have added new indices tracking risk levels across that region as well as for the oil and gas sector."

Highlights of the 2011 Global Macro Risk Ratings include:

Emerging Markets Headwinds
Global political and economic risk levels were on the rise over the last 12 months, with Alliant's Political & Economic Risk Index (ABEM PERI), a benchmark index tracking global macro risk levels, down 0.93 points for the year to 68.30. Emerging markets, which experienced improvements across all major risk indices in 2009, suffered a reversal in 2010 with expropriation and creeping expropriation (ECE) and legal, regulatory and licensing (LRL) risks on the rise across all regions except Eastern Europe. Resource nationalism, especially in the energy sector, was a key driver behind this trend, pushing Alliant's ECE and LRL global indices down by 3.5 points in the last 12 months.

Oil & Gas: Political Risk in the Middle East & Beyond
Looking to 2011, we expect emerging markets ECE and LRL risk indices to deteriorate further as a result of three key drivers: 1) growing resource nationalism in the energy sector, 2) underdeveloped legal and regulatory systems in frontier markets incapable of meeting the challenges of capital and investment inflows, and 3) governments actively challenging investors' recourse to international arbitration, and now the threat of uncertainty in the Middle East. In addition to those variables, Alliant's watch list for the energy sector includes a possible renationalization of the energy sector in Brazil, actions against foreign investors in Ghana and West Africa, and the World Bank's growing political intrusion into arbitration procedures at ICSID.

Sovereign Risk Contagion
Global credit conditions, as tracked by our trade credit (TC) and currency inconvertibility and transfer (CITR) risk indices improved over the last 12 months by an average of 3.83 points. However, the margin of improvement in the OECD was twice as large as in emerging markets. While growth in emerging markets will continue to outperform the OECDs, our data points to a rebalancing of global credit risk levels away from the latter and into the former going into 2011. We expect this trend to accelerate going into the third quarter as inflation, monetary tightening, and potential contagion from the Euro zone sovereign debt crisis negatively impact emerging markets credit quality at the sovereign, corporate, and consumer levels.

About the Emerging Markets Group

With offices in Chicago and New York City, Alliant's Emerging Markets Group is a specialized practice of Alliant Insurance Services, a Blackstone Group company, and is a leading provider of credit and political risk analysis and mitigation solutions. Political and economic risk ratings available through AEM provide forward-looking assessments of the risks of doing business in 176 countries and territories.

About Alliant Insurance Services

Headquartered in Newport Beach, Calif., Alliant Insurance Services, Inc. is one of the largest insurance brokerage firms in the United States and has a history dating back to 1925. Alliant provides property and casualty, workers' compensation, employee benefits, surety, and financial products and services to some 20,000 specialized clients nationwide, including public entities, tribal nations, healthcare, energy, law firms, real estate, construction, and other industry groups. More information is available on the company's web site at: www.alliantinsurance.com.

Contact Information

  • CONTACT:

    Dr. Michel Leonard
    Chief Economist
    Senior Vice President
    Alliant Emerging Markets
    (212) 895-0280
    Email Contact

    Lynda Lane
    Senior Vice President
    Director, Business Relations and Corporate Communications
    (949) 260-5050
    Email Contact