The CFO of a $4 billion cleaning company that had $175 million tied up as collateral for its insurance coverage recently found himself across the table from the chief credit officer and chief actuarial officer of his company’s carrier. His goal: Get the insurer to agree to reduce that collateral requirement, which ate up 75% of the company’s credit revolver. Marcia Linton, national practice leader for Wells Fargo Insurance Services USA, who was helping this company negotiate its policy renewal, says that by conducting a “thorough review” of the company’s financials as well as its third-party actuarial calculations and vetted loss projections, the CFO was able to convince the carrier to reduce its collateral requirement by $20 million in the first year and another $17 million in the second year.

Insurers require collateral to guard against the risk the insured company might fail to pay future premiums or retained losses, particularly in the event of a bankruptcy. But increasingly, companies confronting the need to conserve cash and maximize access to credit and facing a relatively soft insurance market are challenging carriers’ collateral demands. In many cases, they can win significantly better terms.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?


NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.