IAC™ Insurers
The Original “Transformer” Company
Investors Guaranty Fund, Ltd. (“IGF”) has been at the forefront of financial guaranty and insurance securitisation since its founding in 1985. It was one of the first bondholder insurance companies, and in 1989 was the first insurer in Bermuda to have its Policies rated “AAA”, insuring holders of non-investment grade municipal bonds.
In 1991, the Investors Guaranty Fund, Ltd. (Policyholder Reserves) Act, 1991 (the “IGF Act”) was passed by the Parliament of Bermuda (a British Crown Colony) and granted Royal Ascent by Her Majesty. Its development efforts continued when in the mid 1990s, the Principals of IGF filed and subsequently received global patents on insurance securitisation and loss mitigation instruments.
In 1998, IGF formed three insurance subsidiaries: Investors Guaranty Assurance, Ltd., a life assurance company, Investors Guaranty Insurance, Ltd., a standard lines insurance company, and Investors Financial Guaranty, Ltd., a financial guaranty insurance company. These entities served as development and operational prototype models which ultimately resulted in the IGI|IFG|IGA Types of IAC™ Insurers. These IAC™ Insurer types represent “Digital Twins” of the original prototypes.
Each IAC Insurer™ is subject to the IGF Act, operates in conjunction with IGF and maintains compliance with IAC™ Rules & Regulations of The IGF System™. The special nature of these IAC™ Insurers has not been replicated. The IGF Act grants special powers to IAC™ Insurers, including a “bankruptcy proof” reserve structure. The IGF Act creates a structure in which all statutorily reserved assets are held by government approved custodians and IAC™ Insurers must at all times have sufficient assets to fully pay the maximum amount of all “policy payment liabilities”.
This structure is designed to provide the highest form of safety, security and assurance of timely payment. A measure of the efficacy of the legal and operational structure is that internationally recognised rating agencies have rated obligations insured by and/or Policies issued by IAC™ Insurers in their highest rating categories for more than 30 years.
“Designed to provide the highest degree of safety, security, and assurance of timely payment.”
IAC™ Insurers – IGI Type
Investors Guaranty Insurance – IGI Type
… is a type of IAC Insurer™, configured as a general and specialty lines insurer and reinsurer, which is subject to the IGF Act and IAC™ Rules & Regulations.
Insurance and Reinsurance
An IGI IAC Insurer™ is licensed to issue the [Re] Insurance Policy covering a wide array of casualty, liability, property, marine and specialty risks. The coverage may be primary insurance or reinsurance. The unique nature of an IGI IAC Insurer™ provides a platform for the development of new types of coverages related to these types of perils.
Capital Funding
A principal source of funding for IGI is through its issuance of Risk-Linked Obligations™ on a transaction specific basis. These instruments are primarily for acquisition by IGA Type IAC™ Insurers, qualified investment facilities, and third-party institutional investors.
Operations
An IGI IAC Insurer™’s insurance underwriting and asset|liability management are the responsibility of its management team. It does not manage assets for any party other than itself. Proceeds from the issuance of Risk- Linked Obligations™ and other financial instruments are invested in its applicable government obligations portfolios primarily supporting payment of claims and reserves on insurance and reinsurance policies. The IAC Insurer™’s primary expectation is to actively manage its assets and liabilities, premiums and loss reserves to produce positive underwriting results. The IAC Insurer™ operates its insurance activities in accordance with the strict provisions of the IGF Act, including the maintenance of its statutorily reserved assets with government approved custodians. Its financial statements are reported under Bermuda statutory accounting to the Bermuda Monetary Authority, and it operates its statutory reserve structure consistent with GAAP for insurers. The IAC Insurer™ may only issue insurance contracts with a stated maximum claims payment(s) and must, by law, maintain sufficient assets to fully pay the maximum of its Policy obligations. The IAC Insurer™ satisfies this legal requirement by maintaining portfolios of government obligations matched to currency and timing of payment to assure its ability to timely pay all claims payments.
IAC™ Insurers – IFG Type
Investors Financial Guaranty – IFG Type
… is a type of IAC Insurer™, configured as a financial insurer, which is subject to the IGF Act and IAC™ Rules & Regulations. It is specifically designed for financial insurance, bondholder insurance, performance and value insurance.
Insurance and Reinsurance
An IFG IAC Insurer™ is licensed to issue the Financial Guaranty Insurance Policy covering financial and performance risks, valuation risks, repayment risks, non-receipt risks and other forms of financial indemnification. The coverage may be primary insurance or reinsurance. The unique nature of an IFG IAC Insurer™ provides a platform for the development of new types of coverages related to financial, performance, valuation and unspecified perils.
Capital Funding
A principal source of funding for IFG is through its issuance of Risk-Linked Obligations™ on a transaction specific basis. These instruments are primarily for acquisition by IGA Type IAC™ Insurers, qualified investment facilities, and third-party institutional investors.
Operations
An IFG IAC Insurer™’s insurance underwriting and asset|liability management are the responsibility of the management team. It does not manage assets for any party other than itself. Proceeds from the issuance of Risk- Linked Obligations™ and other financial instruments are invested in its applicable government obligations portfolios primarily supporting payment of claims and reserves on financial insurance policies and other forms of credit support contracts. The IAC Insurer™’s primary expectation is to actively manage its assets and liabilities, premiums and loss reserves to produce positive underwriting results. The IAC Insurer™ operates its insurance activities in accordance with the strict provisions of the IGF Act, including the maintenance of its statutorily reserved assets with government approved custodians. Its financial statements are reported under Bermuda statutory accounting to the Bermuda Monetary Authority, and it operates its statutory reserve structure consistent with GAAP for financial insurers. The IAC Insurer™ may only issue insurance contracts with a stated maximum claims payment(s) and must, by law, maintain sufficient assets to fully and timely pay the maximum of its Policy obligations. The IAC Insurer™ satisfies this legal requirement by maintaining portfolios of government obligations matched to currency and timing of payment to assure its ability to timely pay all claims payments.
“Designed to provide the highest degree of safety, security, and assurance of timely payment.”
“Designed to provide the highest degree of safety, security, and assurance of timely payment.”
IAC™ Insurers – IGA Type
Investors Guaranty Assurance – IGA Type
… is a type of IAC Insurer™, configured as a life and assurance insurer, which is subject to the IGF Act and IAC™ Rules & Regulations. It is specifically designed for insurance, portfolio valuation protection and capital funding purposes.
Insurance and Reinsurance
An IGA IAC Insurer™ is licensed to issue [Re] Insurance Policies covering life, health, disability, and other coverages related to persons. The coverage may be primary insurance or reinsurance, individual and/or group. The unique nature of an IGA IAC Insurer™ provides a platform for the development of new types of coverages related to “natural persons”.
Capital Funding
The IGA Type IAC Insurer™ is licensed to issue two types of Policies which are used in funding reserves, surplus and investments in insurance-linked obligations and funding activities. Of note, one of these Policies, the Flex GIA™, may be structured as a highly rated floating rate senior secured debt obligation. The instruments are of a proprietary design and are the subject of international patents. These activities are designed to enable this IAC Insurer™ type to support Policy risks assumed by itself, its IAC Cube™ affiliates, and other IAC™ Insurers.
Portfolio Valuation Protection
The unique properties of the Flex GIA™, may provide asset portfolio valuation protection for certain types of holders. This instrument is an interesting substitute for long-dated government obligations, and is designed to provide stable value properties, low volatility, short duration and interest exceeding typical benchmarks for short-term government obligations.
Operations
An IGA IAC Insurer™’s underwriting and asset|liability management are the responsibility of its management team. It does not manage assets for any party other than itself. Proceeds from the issuance of Flex GIA™ and other financial instruments are invested in its applicable government obligations portfolios supporting payment of principal and accrued interest on such instruments, as well as in diversified portfolios of various asset classes. The IAC Insurer™’s expectation is to actively manage its assets and liabilities to produce a positive spread, after satisfaction of its insurance, reinsurance, portfolio valuation protection and capital funding activities. The IAC Insurer™ operates its insurance and funding/Flex GIA™ activities in accordance with the strict provisions of the IGF Act, including the maintenance of its statutory reserved assets with government approved custodians. Its financial statements are reported under Bermuda statutory accounting to the Bermuda Monetary Authority, and it operates its statutory reserve structure consistent with GAAP for life insurers. The IAC Insurer™ may only issue insurance contracts with a stated maximum claims payment and must, by law, maintain sufficient assets to fully pay the maximum of its Policy obligations. The IAC Insurer™ satisfies this legal requirement by maintaining portfolios of government obligations matched to currency and timing of payment to assure its ability to timely pay all claims payments, including principal and interest payments on its Flex GIA™ contracts. Where an obligation cannot be defined currently, but may be determined in the future, such as the interest crediting rate in excess of the lifetime floor for Flex GIA™, the IAC Insurer™ establishes a reserve from which to increase its government obligations portfolios upon the establishment of an annual interest crediting rate. This “discretionary excess interest reserve” along with it’s capital and surplus available to support establishment of interest crediting rates between applicable market caps and floors, is invested on a diversified basis. These assets do not collateralise the Flex GIA™ contracts, as its portfolios of government obligations do, and must by law, always be sufficient to timely pay all claims payments, as well as principal and interest payments on all Flex GIA™ issued.
Coverage Schematic
IAC™ Insurers provide risk transfer solutions for risk exposures which may have limited availability in traditional markets.
Investors Guaranty Insurance Type
- protects public and private enterprises against unexpected losses,
- enables insurance and reinsurance companies to reinsure loss reserves,
- an alternative to traditional insurance markets.
Investors Financial Guaranty Type
- protects against valuation and other forms of losses on assets,
- can enhance debt issued by public and private enterprises (increasing credit quality and lowering interest costs),
- insurers’ insurance and reinsurance “standby capital” facilities
- may provide credit support for subsidiaries and affiliates.
Investors Guaranty Assurance Type
- FlexGIA™ may be acquired directly or indirectly by governments, sovereign wealth funds, international organisations, public and private enterprises, insurance/reinsurance companies and institutional investors,
- additive to investment portfolio credit quality,
- may increase investment portfolio earnings (for insurance and reinsurance companies may reduce loss reserves and increase surplus),
- may provide asset portfolio valuation protection (for certain types of holders, provides stable value periodic value, designed to mitigate market valuation losses),
- provides reinsurance coverage for life, annuity, health, and accident.
Investors Guaranty Fund, Ltd.
provides reinsurance of risks underwritten by IAC™ Insurers, reinsurance of FlexGIA™ and facilitates proprietary transactions.
IAC™ Policy Perspectives – high quality, special legislation, secured by government obligations
- all policies are fully secured by eligible government obligations, held by government approved custodians,
- insured obligations and issued Policies may be rated with the highest applicable sovereign rating,
- unique structure subject to a special Act of Bermuda Parliament.