SFO provides international Insurance & Financial Advisory
- SFO delivers a portfolio of Insurance products and structured solutions that enable investors to access finance and to de-risk and enhance the security of their investments through the application of proprietary insurance and capital markets solutions that adjust and reduce risk.
- SFO is an outcome led, insurance market solutions provider. The solutions that we create and deploy credit enhance all types of complex transactions thus enabling the efficient flow of global capital.
- SFO team possess an in-depth knowledge of and strong and established connections to, the global markets for insurance & reinsurance. We blend these capabilities with Financial and Capital Markets expertise to assist our international clients with navigating complex deal structures.
- Within the M&A community our specialists provide independent Insurance Due Diligence, insurance programme design and reconstruction, W&I Insurance and supporting transactional solutions that provide our M&A clients with assurance whilst also adding tangible value within the investment life cycle.
- While the common notion of an insurance wrap is often misunderstood, insurers still are not positioned to absorb risks typically held by equity investors, or to provide insurance coverage on volatile financial market risks. SFO offers several solutions that can provide valuable benefits to support certain types of structures and transactions.
- Because of SFO’s wide range of expertise in insurance and capital markets, we are able to address the underlying risk factors of projects on a ground-up basis — sovereign and political risk, FX exchange, commodity pricing, long-term performance of the projects underlying technology, weather exposure and more.
- These solutions are described in detail within the range of SFO Solutions, and can include:
- Residual Value Insurance
- Commodity Price Risk Insurance
- Non-Payment Insurance
- Technology Performance Insurance
- Indemnify lenders against loss of principal and interest.
- Harden collateral values to facilitate debt financing.
- Protect operating companies against adverse moves in commodity prices.
- Remove risk of implementing technology processes in executing projects or corporate growth plans.
- Make capital, whether debt or equity, easier to find and close, and priced more efficiently even after the premium cost is factored.
- Corporate ownership or management
- Project finance sponsors
- Bank and non-bank lenders trying to attain specific credit profiles for their balance sheets
- Owners of or Investors in equity
- Private Equity sponsors
What is monetizing an Insurance Wrap?
- Monetizing insurance wraps refers to using an insurance policy as collateral to obtain financing.
- Monetizing insurance wraps refers to the process of using an insurance wrap as collateral to obtain financing. An insurance wrap is a type of insurance policy that provides coverage for a group of assets, such as a portfolio of investments or a group of properties.
- To monetize an insurance wrap, the policyholder (the borrower) would pledge the insurance wrap as collateral to the lender in exchange for a loan. The lender would then hold the insurance wrap as security until the loan is repaid. If the borrower defaults on the loan, the lender may be able to seize the insurance wrap and use it to recover their losses.
- Monetizing an insurance wrap can be a useful way for businesses or individuals to access additional funding or liquidity. However, it is important to carefully consider the terms and conditions of any financing arrangement, as well as the potential risks and rewards of monetizing an insurance wrap.
- One of the main benefits of monetizing a Insurance Wrap is that it can provide a business with access to additional funding or liquidity. This can be especially useful for businesses that are in need of financing for a specific project or expansion but may not have sufficient collateral or credit to secure a traditional loan.
- Monetizing a Insurance Wrap can also provide businesses with greater flexibility in terms of financing options. For example, a business may be able to negotiate more favorable terms, such as a lower interest rate or longer repayment period, when using a surety bond as collateral.
- Monetizing an Insurance Wrap can also help to improve a business's cash flow by providing a source of funding that can be used to cover expenses or invest in growth opportunities.
- For businesses that no longer need an Insurance Wrap, monetizing the bond can provide an opportunity to sell off an excess asset and generate additional cash. This can be especially useful for businesses that are looking to streamline operations or focus on core activities.
Insurance offered to cover loans backed by intangible assets
- As more companies use intellectual property as collateral for loans, an insurance market designed to help facilitate the deals is emerging.
- While the use of intellectual property such as patents, trademarks, copyrights or other trade secrets to back loans is not new, the assets have previously been underserved by the insurance market.
- Sometimes using insurance-linked securities structures, the insurance coverage kicks in if a borrower defaults on a loan and the value of the intellectual property used to guarantee the loan doesn’t cover the lost value.
- SFO, which has sought to grow its intellectual property insurance business for the past several years.
- Intellectual property can be “mapped” to see where it would fit in its market to help understand its value once in use.
- Once the assets are assessed a value, risks can be quantified and insurance coverage crafted. If you can measure value, then people can lend against it.
- The driver of the increased activity, is essentially less expensive debt financing. Insurance-backed valuations of IP assets allow borrowers to obtain debt financing with much less risk involved for the lenders. Less risk, in theory, should translate to a lower interest rate and perhaps larger loan amounts.
- Principal Protection Wrap Insurance offers a unique structuring of protected funds, enabling bond-like functionality but with no correlation to traditional fixed income.
- This type of insurance coverage enables the re-creation of the principal-guaranteed products that were very popular 15 years ago, but which disappeared due to the low interest rate environment.
- A small, core group of insurers are willing to write principal protection coverage in a range of creative underlying asset types, including managed futures, litigation finance, structured credit and infrastructure.
- The use of this insurance wrapper enables a unique structuring of protected funds, enabling bond-like functionality, with an insured “par” value and “maturity” on the termination date of the fund, but with no correlation to traditional fixed income.
- Superior capital treatment may also be available to regulated investors, such as insurers and banks.
- Our specialists designed and placed a coverage that would allow an asset manager to use an insurance wrapper to offer an innovative, 100% principal protected fund to its investors.
- The insurer writes coverage of a $50mm closed-end fund that would indemnify limited partnership investors against any loss of principal over the term of the fund, whether due to poor performance or expense drag.
SFO is a world leading independent insurance consultancy providing alternative risk transfer solutions to facilitate investment activity, examples include:
- Insuring the value of collateral used in debt funding.
- Managing complex commodity price exposures via insurance policy structures.
- Supporting litigation finance investment activities with unique insurance risk management tools.
- Wrapping insurance-based principal protection coverage around alternative investment vehicles.