A planned Approached to Structured Risk Financing

From experience, inevitably the best outcomes for InterRISK clients are achieved when we are involved early in the process and are able to identify and work with clients and to understand the risks associated with their projects. The appropriate risk transfer options including: the right insurance solutions: and, to ensure we put in place a comprehensive, ongoing risk management strategy.

There are circumstances in the process of managing risks that call for Structured Risk Financing that goes beyond conventional transfer of the entire risk to the traditional insurance markets. Financial advantages often accrue from a structured approach to risk retention and transfer. InterRISK's experience in Structured Risk Financing provides further added value to its clients.

Possible triggers to a Structured Risk Financing approach may include:

• Traditional insurance covers becoming more restrictive
• Decline in insurance market capacity
• Extraordinary increase in net retentions (inner deductibles)
• Premium rate volatility (non-predictable insurance cycles)
• Protection of certain Operational and Financial Risks, otherwise considered "uninsurable"
• Superior Risk Management, not fully considered in premium rates
• Balance sheet ability to retain significant risk more economically than traditional maket pricing

These circumstances can create a financially positive and attractive environment for the formation of alternative risk financing vehicles such as Captive Insurers and alternative methodologies within the realm of Structured Risk Financing.

InterRISK is well positioned to advise on the feasibility of establishing Captive Insurers (or other Special Purpose Vehicles), as an alternative to traditional risk transfer.
Advantages may include:

• Considerable cost savings (capital, premium and administration costs)
• Attractive cash-flow-benefits
• Efficient and Group-controlled claims management facilities
• Strengthening of internal Risk Management

Our Expertise

With the rapid expansion and success of Australian businesses around the world, the skills necessary to manage global insuranceInterRISK's has extensive experience with blended risk solutions that combine elements of conventional insurance/reinsurance and alternative risk transfer. InterRISK can also evaluate the feasibility of establishing captive insurance facilities, both on and off-shore, and their necessary reinsurance treatment.

Our experienced staff have structured and placed hybrid program solutions for large corporations, financial institutions, and government corporations, particularly alternative risk transfer, self-insured protections, contingent capital covers and facultative reinsurance.

A variety of methodologies are applied to the ultimate cost-efficiency in protecting a Captive and its parent's equity and risk capital, such as

• Traditional Treaty and Facultative Reinsurance Programs
• Alternative Risk Transfer on Client's/Captive's net retention - expected retained notional risk
• Alternative Risk Financing on Client's/Captive's net retention and low claims frequency levels, i.e. excess of loss protections
• Contingent Capital Covers acting as post loss stand by letters of credit
• Loss Portfolio Transfers - transferring incurred long-tail losses to a separate risk carrier

InterRISK addresses the viability and sustainability of Structured Risks Solutions for its clients and evaluates and determines efficient treatment by testing any proposed structure with the potential ultimate markets.

Global Expertise

With the rapid expansion and success of Australian businesses around the world, the skills necessary to manage global insurance programs is paramount. At InterRISK our team has proven project management skills required to identify and manage the best available resources in any location. We work with local suppliers to ensure that a focused, properly resourced and performance oriented service is provided to you.

Although InterRISK is Australian based, we have access to all reputable insurance, reinsurance markets and captive management domiciles through agreements with key intermediaries on a global basis. We are not limited by the need to use any particular service providers in accessing other insurance markets. Nor is InterRISK tied to any insurance or reinsurance underwriters. Therefore, we ensure that the most suitable and skilled intermediaries assist us to obtain the best result for you. This independence and selection of service providers also continues through to risk management services, an area in which we are able to provide specific solutions to meet your needs.