Karson Management’s specialist alternative collateral provider called Karson Capital closed its $825 million collateral transaction for ING Insurance.

Karson Management teamed up with ING Bank to arrange eligible Regulation XXX collateral for a large block of life insurance business ceded by Security Life of Denver Insurance Co. to Security Life of Denver International through a wholly owned special purpose subsidiary of Karson Capital.

“The Karson collateral service will provide the global insurance markets with an efficient, scalable, and price-competitive source of short and long term collateral that will compete favorably with conventional alternatives, where supply and pricing have been all over the map,” said Derrell Hendrix, CEO of Karson Management.  “It will also avoid the inadvertent investment risks and breathtaking complexity that characterized previous securitization efforts in the U.S. life market. What we have built is simple, secure and standardized, while meeting the high quality security required by clients and the eligibility requirements of regulators.”

The form of collateral issued is a new and innovative financial guarantee in the form of fully-secured demand notes, which have been designed to enable the ceding company to take credit for reinsurance or solvency relief under U.S. insurance laws and U.K. insurance regulations.

The collateral provided will function as a practical alternative to LOCs and individually funded trusts and will be fully backed by a portfolio of high quality assets. The Karson Collateral Program uses intellectual property licensed from The RISConsulting Group of Boston, MA and is administered by BNY Mellon providing collateral management, corporate trust and custody services.

Karson is currently working on several follow-through transactions with ING Insurance and ING Bank (for other clients), as well as a number of third-party insurers and bank and non-bank capacity providers.

“In addition to the life sector, we see opportunities in both the P&C reinsurance and the ILS markets,” said Richard Black, managing director of Karson Capital in Bermuda. “Our flexible platform can provide new and efficient sources of collateral to the market when traditional capacity is unavailable or uneconomic, or does not allow investment flexibility. We are expanding our marketing team and look forward to building a dialogue with all sectors of the industry.”

 

 

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