Bermuda-based political risk specialist Sovereign Risk Insurance Ltd. plans to set up its first overseas office in Dubai.

Sovereign, which is owned by Ace Bermuda Insurance Ltd., a wholly owned subsidiary of Ace Ltd., has a staff of 10, one of whom will be relocated from Bermuda to Dubai to head the new subsidiary.

Chief executive officer Price Lowenstein told The Royal Gazette that demand for political risk insurance was rising, partly as a result of the sub-prime mortgage crisis.

"The timing is very good in that the political risk market is growing rapidly now and we have really benefited from the sub-prime crisis," Mr. Lowe

"Every crisis has its winners and losers. The winners have been the emerging markets. So therefore political risk insurance has become more important."

Sovereign has received approval in principle from financial regulator the Dubai Financial Services Authority (DFSA) to establish the wholly-owned subsidiary Sovereign Risk Insurance (Dubai) Ltd., which will be headed by Nila Davda, vice-president and senior underwriting officer.

"Nila has been travelling to the region and she also speaks Gujarati and Hindi, as do many of the bankers of Indian extraction in Dubai," Mr. Lowenstein said. "Nila will be playing a marketing and client contact role in Dubai. The business we do will be written out of Bermuda.

"It's our first overseas office after more than 10 years in business and we thought over this very carefully. We believe Dubai is the right place to be.

"If you look at the pace of infrastructure growth and the level of investment in the Gulf countries and the wider Middle East, we think there is tremendous potential."

Sovereign is one of the world's leading providers of political risk insurance and reinsurance. The company's portfolio exceeds $13 billion of exposure spread over 100 emerging markets. Clients include financial institutions, national export credit agencies, leading multilateral agencies and multinational corporations.

In its fiscal year ended June 30, 2007, Sovereign some $68.1 million in gross premiums and Mr. Lowenstein said he expected that figure to rise by some 10 percent this year.

Mr. Lowenstein said Sovereign intended to replace Ms Davda on its Bermuda staff and look towards expanding its workforce on the Island in the future.

The company is particularly active in Russia and Turkey and expects to see increasing amounts of business coming from Africa and the Middle East.

But Mr. Lowenstein said Sovereign would probably not be looking to set up any more overseas offices "for a few years".

"We have stuck to the Bermuda model of being small and centralised that has worked extremely well for us," Mr. Lowenstein said.

In a statement released yesterday, John Keogh, CEO of Ace Overseas General said: "Ace is delighted that Sovereign will be opening an office in Dubai. This fits in very well with our strategic initiatives in this region and adds another key product to our capabilities, helping us meet the needs of our clients, both regionally and globally."