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B-173240 1 (1972-04-11)

handle is hein.gao/gaobabldw0001 and id is 1 raw text is: RESTRICTED - Not to be releoed .UtsleFI@ eeerat Acaountiws Cf1Mcs axceP! the basis e.l #rf rov -o ~by the O~es of Congresionl ReWetIlsy ) . COMPTROLLER GENERAL OF THE NI DOT WASHINGTON, D.C. 2O' B-173240 11111111 HEI111111111111111111111111111111111111 LM090743 Dear Mr. Ghairman: In your letter of January 28, 1972, you requested the cooperation of the General Accounting Office in a study of the insurance rate structure of the Overseas Private Investment Corporation (OPIC) suggested 17) by the Senate Appropriations Committee in its report on the foreign assistance and related programs appropriation bill for fiscal year 1972. We have developed, what we consider to be, the pertinent information relating to OPICTs insurance rate structure and, as suggested in your letter, have discussed this material with Mr. Norvill Jones of your staff. He requested that we provide the Committee with some guidelines that could be used in considering what sort of study OPIC should make of its insurance rate structure. In the following pages we are offering various suggestions. We are also including some pertinent background information on OPIC's present insurance rates. OPIG's basic purpose is to encourage U.S. private investment in less developed countries and thereby to complement the development assistance objectives of the United States. The theory behind the OPIC insurance program is that U.S. private business will be encouraged to invest in foreign-based enterprises if insurance against the principal political risks (that is, expropriation, inconvertibility of currency, and war, revolution, or insurrection) of doing business in less developed countries is provided at a modest cost. Prior to the establishment of OPIG, which was created by the Foreign Assistance Act of 1969 (Pub. L. 91-175, Dec. 30, 1969), the political risk insurance program was administered by the Agency for International Development. Two of the reasons stated in the Foreign Assistance Act of 1969 for establishing OPIC were: 1. To establish a corporate organization with businesslike operations which could provide for investment financing on a self-sustaining basis. 2. To apply risk management principles to the issuance of insurance.

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