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18th of May 2012

Reinsurance trusts offered as LoC alternative

Vicky Beckett 07/11/2011

An alternative to letters of credit is being offered to captive insurers by Wilmington Trust.

An English Law Reinsurance Trust Agreement is reported to provide mitigated risk and a cost-effective alternative to tradition letters of credit (LoC).

A reinsurance trust gives risk portfolio managers at fronting insurance companies an alternative collateral support service to mitigate the current bank concentration risk associated with letters of credit.

The new agreement is hoped to promote the Wilmington Trust’sappeal to the international captive market.

Christophe Schroeder, executive managing director of Wilmington’s corporate client services’ European business, said: "This agreement has been drafted to offer the captive insurance industry in the UK an additional cost effective service in support of their collateral requirements."

"Wilmington sees this new service for the international market as an excellent way to increase its support for the captive insurance market," said John Traynor, managing director of client development in the global capital markets group for Wilmington’s corporate client services.

Tags: Captive insurance, Collateral, Corporate client services, Cost effective, Fronting, Letters of credit, Reinsurance, Schroeder, Traynor, Wilmington trust

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