Credit Insurance and Surety Solutions for Lenders

COVID-19 lockdowns have accelerated the trend towards raising capital against accounts receivables and supply chain finance structures as well as increased the need for financial institutions to manage their capital requirements across a broad range of asset classes. These demands are driven by a need to sustain and grow working capital and liquidity as the world emerges from the crisis.

Many lenders are turning to credit insurance and surety solutions to facilitate lending without putting their business at risk.

Transferring credit risk to insurance markets enables lenders to deliver efficient finance to borrowers by reducing their credit risk across diverse portfolios of assets. This allows for regulatory compliant risk-weighted asset reduction and an opportunity for increased profitability in support of growth strategies. 

Benefits for lenders

Our credit insurance and surety solutions can benefit lenders in the following ways:

  • Insulate the balance sheet from loss events.
  • Attract investor capital.
  • Manage portfolios for customer/obligor, industry, country, and sector risk concentrations.
  • Avoid dilution of customer relationships.

How we helped an international bank extend credit

An international bank was unable to extend further credit or guarantees to an important global commodity client due to the bank’s internal limit constraints. We worked with the bank to help it support its borrower client by arranging committed surety capacity. The facility was structured via a master risk participation agreement, allowing the facility to be expanded in the future.

Surety insurers replaced a significant proportion of the bank’s guarantee exposure, creating additional headroom for borrowing and ancillary business. The bank also benefited from the transaction, since the surety insurers’ strong credit rating provided both credit limit and regulatory capital relief.

Our expertise with lenders

We work with commercial and public lenders, borrowers, and suppliers on all sides of financing transactions. We offer insight into the application of credit risk solutions across a range of structures to facilitate financing.

Our specialist knowledge covers a range of asset classes and products for lenders including:

  • Surety. 
  • Portfolio risk transfer solutions.
  • Derivative exposures.
  • Real estate exposures.
  • Project finance, infrastructure, and renewables.
  • Aviation finance.
  • Sustainability and environmental, social, and governance (ESG) lending.

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”