Alternative Risk Transfer创新风险转移.pdf

C a s s B u s i n e s s S c h o o l C h e n g C l a r e C h e n S t u d e n t I D : 0 9 0 0 4 3 6 9 4 2 4 t h o f J u n e , 2 0 1 0 Cheng Clare Chen The spectrum of Alternative Risk Transfer (ART) solutions has expanded rapidly to match the increasing demand of corporate in improving the efficiency of the risk transfer, broadening the ranges of insurable risks and tapping the capital markets for additional capacity. In the first two sections, I will discuss two ART techniques that have attracted special attention in their recent development: contingent capital and insurance-linked securitisation. Two real-life completed contracts are chosen to illustrate the ‘alternative’ key features, benefits and concerns of these products from the perspectives of protection buyer and seller. The last section of this document is on the important factors that would impact on the development and use of ART techniques. Alternative Risk Transfer: Michelin Deal and Vita Capital III Alternative Risk Transfer Coursework Cheng Clare Chen Student ID: 090043694 1. Contingent Capital: The Michelin Deal Transaction Details 1 In late 2000, Compagnie Financiere Michelin (CFM), a Switzerland-based tire maker sought access to capital for future contingencies to fund future acquisitions or expansions. It opted for a new contingent capital strategy called committed long-term capital solutions, or CLOCS. The deal was structured as a 12-year, $1.1 billion subordinated capital facility that is syndicated both to insurance companies, such as Zurich-based Winterthur, and to several European banks, including lead French bank Société Générale. The new capital facility replaces Michelins previous 15-year, $1.1 billion junior subordinated credit facility that was arranged in 1990 by J.P. Morgan. Swiss Re structured the insurance facility to provide Michelin the option to draw should GDP growth in Michelins main markets decline to pre-agreed leve