OPERATIONS

Statutory Reserves

Investors Guaranty Fund, Ltd.

(Policyholder Reserves) Act, 1991

“Quod dare non possis verbis promittere noli – Cato”
“What you cannot perform, do never promise.”

A Latin tenet given over by the late Alasdair G. “Sandy” Barclay, President Emeritus of Investors Guaranty Fund, Ltd., (“IGF”) is central to the development of IGF’s leading edge financial technology, focused on a fundamental ability to quantify risks accepted and to assure payment of one’s obligations. In a credit environment reeling from the “Twist Cap” case in the mid 1980s, the founders of IGF sought to develop a credit structure, which was bankruptcy-proof, not simply bankruptcy remote, as was then the standard in the United States.

Concurrently in Bermuda, policyholders were not afforded a priority status over general creditors, as was common in the U.S. Preferences in bankruptcy, systemic risk in the banking sector, and the transition from physical to book-entry securities created challenges in collateralisation and credit analysis of the then evolving world of asset securitisation.It was against this backdrop, at a time when financial guaranty and asset securitisation were in their infancy, that the fundamental principles of collateralisation, securitisation, and bankruptcy-proof credit structures converged to form the core technology of IGF and were the inspiration for the ground-breaking segregated reserve legislation, the Investors Guaranty Fund, Ltd. (Policyholder Reserves) Act, 1991 (the “IGF Act”). The IGF Act does not seek to create a TRUST, but rather sought to change the manner in which insurance companies in Bermuda, subject thereto, are regulated and must operate, to assure the highest degree of safety, security and assurance of timely payment. IGF is believed to be the first insurance company in Bermuda to have its policies rated “AAA” by Standard & Poor’s, and the IGF Act was a codification of the underlying technologies developed to obtain this highest of credit ratings.

  • First, each IAC Insurer™ must not be subjected to liquidation or bankruptcy in a manner that allows a bankruptcy trustee to abrogate or modify contracts issued by the insurer. This is precluded by the IGF Act.
  • Before an IAC Insurer™ issues a policy (including a Flex GIA™ and a Guaranteed Investment Agreement™) it must have sufficient permitted assets reserved, charged and invested in a manner to assure its ability to timely pay 100% of its Policy obligations.
  • Each IAC Insurer™’s statutory reserve assets must be held by Bermuda Government approved custodians, subject to applicable rating and custody arrangements, approved by the Minister of Finance of Bermuda. Each IAC Insurer™ is subject to the oversight of three Bermuda regulators, the Minister of Finance and Registrar of Companies of Bermuda under the IGF Act and the Bermuda Monetary Authority.
  • Each IAC Insurer™ is regulated under Bermuda insurance law, further subject to the IGF Act, requiring annual audit|certifications, actuarial reserving, and regulatory filings. Consistent with standard procedures for life insurers, IGA Type IAC Insurer™s establish reserves for repayment of principal, accrued interest and future interest, as applicable.

Standard Bermuda law, unlike the US, does not create a policyholder preference over general creditors. The IGF Act creates a preference for policyholders (including Flex GIA™ holders) over creditors and specifically does not give any party a beneficial interest in the assets of an IAC Insurer™, i.e. an IAC Insurer™ IS NOT A TRUST. A purpose of the IGF Act is to substantially reduce the possibility of default, and in the unlikely event a default were to occur, to prescribe the statutory procedure for satisfying the claims of Policyholders, and other creditors. This structure has been reviewed by leading rating agencies who have rated and/or confirmed their willingness to rate Policies issued by and bonds insured by IAC™ Insurers, including Flex GIA™, in their highest respective ratings category. While the IGF Act severely limits disclosure of specific details of Policy particulars, each IAC Insurer™ is under a strict affirmative duty with regard to “know your client” and anti-money laundering.

Operations – Overview

A Global Marketplace

IAC™ Marketplace has been designed to operate patented systems and financial technologies for the purposes of: i) providing financial and insurance risk solutions for strategic clients, ii) employing capital in proprietary transactions involving insurance and risk mitigation activities and/or capital funding; and iii) other forms of risk and financial transformation.

(r)IaaS™ or (risk) Infrastructure as a Service™  utilises The IAC Cube™ configuration of IAC™ Insurers to enable parties to use this advanced infrastructure for their risk mitigation and funding objectives. These “Sponsors” enter into an (r)IaaS™ covenants related to formation and operation of a trio of IAC™ Insurers, an IGI, IFG, IGA type, the IAC™ Cube.

IAC™ Insurers maintain strategic relationships with regulated insurance underwriters, underwriting advisors, consulting advisors, actuaries, portfolio managers, asset advisors, investment bankers, legal and accounting firms, government approved custodians, and professional consultants (collectively, “accredited firms”). These accredited firms utilise the patented systems and technologies to facilitate their client objectives and IAC™ insurance, portfolio protection, funding, and technology activities. Day to day operations are managed from Bermuda and supported by a global network of affiliated professionals.

Capital

IAC™ Insurers provide a high degree of safety, security, and assurance of timely payment of insurance and senior secured obligations. By law, these statutory reserve IAC™ Insurers must at all times maintain sufficient assets with government-approved custodians to support timely payment of 100 percent of Policy obligations. Capital for insurance and capital markets activities may be sourced from capital market participants through debt, equity, digital assets and other forms of capital markets obligations linked to specific transactions, portfolios, and risk transfer activities.

Ratings

Major international rating agencies have assigned their highest ratings to specific obligations issued and/or insured by IAC™ Insurers. Ratings are specific to each transaction and each rating agency’s rating rationale should be consulted for more detailed information.

Principal Activities

The principal activities of IAC™ Marketplace are provision of (risk) Infrastructure as a Service™ for the  issuance of highly rated insurance contracts and transformation of other risks and various forms of assets into risk-linked obligations and digital assets; expansion of accredited firms using its patented systems and technologies; creation of strategic client relationships and provision of tailored financial solutions.

Technology Development

For three decades, IGF has been developing and prototyping state-of-the-art technologies for transformation of assets, risks, and other forms of financial obligations. Substantial development activities have resulted in a legal infrastructure and electronic systems designed specifically for global transactions which must be highly rated, meet stringent guidelines and comply with security, tax, accounting, and regulatory requirements (“STAR” issues). For each application and transaction, extensive review of all STAR issues is required.

Global Access

IAC™ Marketplace is designed for IAC™ Insurers and accredited participants to interact through global edge-centric electronic systems to enable on-line access to develop new transaction structures; create insurance capacity from global capital markets; and transform risks into capital markets and digital assets obligations. These collaborative capabilities are for facilitating interaction between insurance brokers and intermediaries, underwriting advisors, program sponsors, asset managers, securities firms, as well as legal, accounting, audit, actuarial, custody and other industry professionals.

Transformation

IGF’s patented insurance technology transforms insurance risk assumed through an insurance policy into debt, equity and/or residual obligations for retention by IAC™ Insurers and/or acquisition by capital markets participants. The risk is passed through IAC™ Insurers and mutualised across capital market participants instead of policyholders as in traditional insurance companies. This process utilises insurance brokers and risk underwriters; asset managers and investment bankers; and transaction support professionals traditionally required by capital and insurance market transactions.