BANK RISK INSURANCE

Credit risk confirmation is a necessity in a day and age where globalization is the main frame.

Bank Risk Confirmation insurance protects the Confirming/Discounting banks against non-payment of trade documents by issuing banks. 90% of the risk is covered and these policies can be scripted for single/multiple transactions from the same bank and/or the same country.

How does it work?

HOW DO WE HELP IN BRINGING SOLUTIONS TO BANK/FI’S?

Liberty Mutual Insurance advises on Risk Mitigation for Lenders/ FI’s by assisting treasury teams in identifying the possible ways of reducing risk weighted assets. Depending upon the portfolio of risks and possible combinations of insurance solutions; we work in tandem with select insurers on the best possible bespoke cover. In the Insurance Industry, Liberty Mutual Insurance deals with A+/AA rated Re/Insurance companies in the world thereby bringing quality to every transaction. These solutions/products enable Banks/FI’s to take Capital relief under the prevalent BASEL norms.

WHAT DOES IS COVER ?

Risks covered include business failure of issuing bank, protracted default by issuing bank, political risks in the issuing country such as expropriation, confiscation of product/service under the contract, war, riots, prohibiting converting of currency.

PORTFOLIO INSURANCE

Lender sends in details of the portfolio it would like secured, e.g.: geography wise, set of banks, or the entire confirmation portfolio. The insurer offers quotes which would include pre-approved limits covering first loss on the portfolio.

Premiums could be fixed/flexible, with a minimum commitment fee and a pay as you go option as well.
The policy wordings are Basel 3 compliant and hence offer an immediate capital relief on the required capital adequacy clause

TRANSACTIONAL INSURANCE

Lender makes a submission of the particular trade with details of the issuing bank, value of trade, underlying trade details etc. This could be a one off transaction with a new bank or a large transaction received wherein the existing capital / bank lines would not be able to cover the transaction. The insurance cover on the given transaction allows the bank to mitigate risks of higher variants and maintain its CAR effectively as per Basel II /III requirements.