Unfunded Risk Partnership (URP)

While financial institutions represent the most significant insurance buyers in the structured credit and political risks market, there is a significant variation today by country and region.

There are banks that are comfortable with the terms and conditions of a traditional comprehensive non-payment insurance product, and banks that face limitations in the capital relief they can realize with such product.

Our diverse, global and specialist team designed the unfunded risk partnership (URP) to overcome any such hurdles and provide an effective risk distribution solution that delivers economic and/or regulatory capital relief to all financial institutions.

We find opportunities where others see challenges.

WHAT WE DO

Unfunded risk participation

The principle of unfunded risk partnership (URP) is for insurers to be risk partners in every sense with financial institutions such that an institution can be certain of aligned interests in all scenarios.

The partnership concept is designed to ensure an alignment of interest in risk sharing, risk return and information between the financial institution and the partner, as if they were participating pari passu in a transaction. For this reason the terms and conditions of the URP are closer to those of an on-demand guarantee making it a distinct product in the insurance market.

Among other benefits, our URP product also delivers regulatory capital relief to all financial institutions, almost immediately reduces the liquidity shortfall created by a loss, improves the recovery position of the financial institution and contributes to the overall profitability of a transaction.

Unfunded risk participation

URP agreements can be arranged for all the business segments and transaction structures currently insurable in the structured credit and political risk market, for trade related and non-trade related transactions, risks located both in emerging and OECD countries and tenors from under 12 months to 15 years and beyond.

Our URP specialists are based in Paris but are an integrated member of the CPS International network, meaning that the URP can be arranged with local expertise in all regions to suit the preferences of our clients.

Key Stats

More than 200 live transactions insured by URP660 policies placed in the past 10 yearsAggregate limits of liability in excess of USB 3bn15 years of experience placing URP

WHY JLT

Unfunded risk participation

Clients who seek to utilize unfunded risk partnership need to ensure that they select a broker with the relevant skills, knowledge, and expertise in their business sector. We believe insurance contributes to the growth of your business, as well as provides crucial protection in challenging circumstances.

We find opportunities where others see challenges. Our entrepreneurial culture and exclusive analytical ability helps clients to identify and realize opportunity in volatility.

Our multilingual team handles broking services for clients globally, including many of the world’s leading corporations, financial institutions, and government/multilateral agencies.

JLT CPS clients benefit from:

  • Access to our diverse global team that delivers creative, comprehensive risk and insurance solutions which facilitate growth, reduce capital costs, improve returns, and secure people and assets
Unfunded risk participation
  • Ideas and products that positively impact and inform risk mitigation, risk transfer strategies, and business decisions
  • Our ability to create capacity to underwrite new and evolving risks
  • Our proprietary analytics tools ensures you have access to complete and accurate real-time information which enables fact based decision making
  • Experienced resources available where you need them without geographical or financial barriers
  • Consistent engagement through advisory, structuring, placement and claims, drawing in management leverage and technical expertise to ensure that when losses do occur, we maximize recovery and minimize the impact on your operations.

Case Study

International Bank Uses URP

An international bank, which was participating in many syndicated transactions with European banks that are major users of insurance was struggling to obtain regulatory capital relief from a traditional comprehensive non-payment insurance product due to its local regulator’s interpretation of the Basel guidelines. We presented the URP concept to the bank highlighting the product features that would enable it to overcome the constraints imposed by the regulators.

Once the bank obtained the green light to proceed with the URP, we organized meetings between the bank and potential risk partners in order to start the on-boarding process with this new client. The bank introduced the portfolio of risks it intended to cede to risk partners and presented its internal procedures including examples of how the bank deals with situations of default and restructuring. Insurers presented their capabilities, the extent of their risk appetite and their experience insuring a wide variety of risks under a URP agreement. Throughout this on-boarding process, we ensured that each party’s expectations were clear and that the there was a transparent dialogue between the bank and risk partners.

In parallel, we shared our template URP wording with the bank and negotiated the adjustments that the bank required with risk partners upon which a master URP agreement was signed between the bank and each of the partners. From that time onwards, the bank has been able to insure transactions via risk participation certificates that are attached to the master agreement.

Our team markets enquiries for the bank and ensures that the partners demonstrate the commercial attitude implied by the URP. The bank can now assign regulatory capital relief to the transactions that are covered by the URP and it has been able to free up capacity on its most utilized counterparty lines, creating new business opportunities for its clients.

Claims Capabilities

We deliver results. We deploy all resources to help resolve complex losses and deliver claim payments.

Our clients have confidence that the insurance policies we arrange are expertly structured and written by experienced insurers with strong track records in paying claims. Our approachable brokers work alongside our meticulous CPS claims professionals who specialize in handling, managing and negotiating claims.

In the event of a loss, we provide:

  • A single point of contact with overall accountability for all losses wherever they occur
  • Our proactive claims handling process maximizes your recovery under your program, while minimizing the intrusion and interference to your on-going operations
  • We leverage our strong relationships with major leaders, loss adjusters and lawyers to help expedite the claims process
  • Access to our sophisticated pre-loss consulting and effective post-loss recovery services.

CPS ANALYTICS

Our starting point when structuring a new policy is to precisely understand your needs. Our brokers sit alongside a team of risk analysts drawn from security, technical and academic backgrounds.

Their substantial knowledge is utilised to help us understand the precise nature of your risk profile, thereby assisting us in determining the right insurance solution for your requirements.

Using ground-breaking modelling and rating tools, such as Sunstone and World Risk Review, our analysts can pinpoint risks, map exposures, analyse the risk triggers, and evaluate probable maximum loss (PML) ratios across a portfolio of assets.

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