Solutions for problematic debt
Outstanding debts with troubled reinsurers and insurers and/or creditors of insolvent estates can have a severe impact on your company’s performance.
Working with fund partners, we can free you from a range of difficulties including:
- Collecting slow or non-moving debts from problematic reinsurers
- Dealing with smaller debts that you no longer have the resources to manage cost-effectively
- The time-consuming distractions of dealing with reinsurers in particular territories
- Insolvent debts that will take years to realize and are inadmissible as assets
Problem debts can be purchased from you by taking an assignment of the rights to current and future collections under the policies. Taking a scalable approach to debt purchase, we will consider single-policy transactions, entire books of business, single reinsurers or whole portfolios.
Quotes can be provided on a one-time-payment basis or we can work with you to tailor a cost-effective solution that provides the best fit with your needs from the transaction.
Our debt-purchase solutions enable you to:
- Increase liquidity by accelerating cash flow
- Achieve certainty on reinsurance and insurance asset values
- Improve your balance sheet by releasing bad-debt provisions
- Reduce administration costs
- Refocus on core business activities
- Solve the growing problem of collecting aged debt
When you assign your debt, in exchange for an immediate cash payment, our fund partner assumes the right to receive all current and, where agreed, any future funds due under the relevant policy or policies.
Legally, the underlying contractual relationship between the assured and the insurer remains in place. An assignment agreement signed by both parties, however, explicitly details the benefits assigned and the consideration paid for those benefits. This agreement includes covenants and warranties on the benefits assigned and what each party will or will not do.
This solution is simple and straightforward for us to calculate and carry out, and it involves minimal cost or disruption to your business. All we need is appropriate access to the relevant people and documents in your organization so we can carry out a due-diligence analysis on the debts in question.
The specific details of the process depend on the nature of the business. For example, the creditors of insolvent estates will be treated differently from those of general reinsurance assets.