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Methods and apparatus for securitizing insurance, reinsurance, and retrocessional risk

  • US 20060173720A1
  • Filed: 02/01/2005
  • Published: 08/03/2006
  • Est. Priority Date: 02/01/2005
  • Status: Abandoned Application
First Claim
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1. A method of securitizing risk comprising:

  • establishing a business entity with a predetermined period of existence, the predetermined period including an underwriting phase of a first predetermined duration followed by a runoff phase of a second predetermined duration;

    raising capital through a sale of securities of the business entity;

    actively underwriting and assuming a plurality of risks in exchange for premium during the underwriting phase, the plurality of risks including at least one of an insurance risk, a reinsurance risk, and a retrocessionary risk;

    ending the active underwriting and assumption of risks at an end of the underwriting phase;

    giving an investor a first option at the end of the underwriting phase, the first option including at least one option for (i) requiring a redemption by the business entity of shares in the business entity, (ii) rolling over equity in the business entity to a second business entity, and (iii) remaining invested in the business entity;

    purchasing reinsurance-to-close to discharge risk of the business entity proportional to the shares being redeemed by the investor and to shares utilized to roll over equity in the business entity to the second business entity;

    discharging risk during the runoff phase remaining after the purchase of reinsurance-to-close; and

    ending the existence of the business entity at an end of the runoff phase.

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