LPTs (Collateral Help)

Collateral Management “Strategies”

Loss Portfolio Transfers

4Sight Risk Management Strategies LLC offers innovative assistance in managing your insurance program collateral obligations with three specific services, in particular Loss Portfolio Transfer (LPT).

Negotiating New and Existing Collateral Requirements

After review of your client’s loss runs/historical exposure information, contractual agreement with the insurance company and insurance policies, we will likely be able to assist you with an innovative approach to improving your collateral responsibilities.  We will work with you and your broker directly or indirectly in negotiations with the insurance Carrier(s) or if you prefer, we will provide you with Strategy options.

In the current economic environment, many are finding that the most effective means to address collateral requirements for historical insurance programs, wrap ups and captive insurance companies is through at Loss Portfolio Transfer.

Loss Portfolio Transfer

What is a Loss Portfolio Transfer?  

A Loss Portfolio Transfer (LPT), sometimes known as a reserve buyout, is a method of transferring outstanding loss liabilities.  In exchange for a one-time payment, the current insurer or self-insurer is relieved of the financial and administrative responsibility for the losses transferred.

Potential Benefits to an LPT

• Closure to a Wrap Up Insurance Program.
• Conversion of unknown future liabilities into a fixed payment.
• Return of collateral when out of proportion to probable future liabilities.
• Improved Balance Sheet.
• Improved Surety Capacity.
• Possible tax advantages.

Who Might Need an LPT?

• Any company with overstated collateral requirements.
• Developers or Contractors looking to close out expired Wrap Up Insurance Programs.
• Developers or Contractors with Captive Insurance Companies.
• A Captive insurer or reinsurer.
• A Risk Retention Group or Trade Association.
• An insurer or reinsurer in run-off.
• A merger or acquisition partner for whom a transfer without prior liabilities is preferred.

What is involved and what does it cost?

With some basic information such as current loss runs, exposure information, historical actuarial reports if any, we will provide you with a preliminary analysis as to the likely outcome of a LPT marketing effort. To the extent that we do not receive compensation for our efforts unless you elect to proceed with the LPT, you can be assured that we are not going to encourage  you  to proceed with the multiple month effort necessary on our part, unless we think there is a reasonable likelihood that we can deliver a product that you are going to purchase.

All information that you provide us will be held in complete confidence.  We are more than willing to execute a confidentiality agreement. 

Experience and Capabilities

With nearly 30 years of experience as a Construction Underwriter, Underwriting Executive, Broker, Consultant and Contractor, we have formed and successfully managed Wrap Up Insurance programs, underwrote, brokered and managed Subcontractor Default Insurance (SDI) Programs, managed SDI claims, Captive Insurance Companies, Alternative Risk Financing programs such as finite risk, contingent capital, loss mitigations and Loss Portfolio Transfers.

“Our favorite holding period is forever.”

Warren Buffett