Structured Settlement Case
Situation:
In this case, a U.S. policyholder had negotiated a structured settlement against a marginally solvent insurer in run-off. The insurer agreed to pay its settlement in a number of payment installments, over multiple years, to the policyholder. Because of market conditions and the type of asset involved, the policyholder was unable to discount or finance against this receivable with its traditional bank relationships.
Action:
At engagement, GRC was able to complete due diligence in under two weeks, which ultimately led to the sale of a five-year amortizing settlement for an upfront lump sum equal to the net present value of the future expected cash flows.
Result:
The policyholder maximized the value of a significant illiquid balance sheet asset. This sale enhanced cash flow and eliminated credit and rate risk associated with carrying the non-interest bearing asset on the books. The success of the initial transaction contributed to the policyholder's decision to work with GRC on four more transactions over the next three years.
