Matrix often receives enquiries about the availability of ‘insurance wrappers’. This is a catch-all phrase, generally intended to describe using an Insurance Policy to take on specific risks created by assets values or financial transactions.
While the common notion of an insurance wrap is often misunderstood, insurers still are not positioned to absorb risks typically held by equity investors, or to provide insurance coverage on volatile financial market risks. Matrix offers several solutions that can provide valuable benefits to support certain types of structures and transactions.
Because of Matrix’s wide range of expertise in insurance and capital markets, we are able to address the underlying risk factors of projects on a ground-up basis — sovereign and political risk, FX exchange, commodity pricing, long-term performance of the projects underlying technology, weather exposure and more.
These solutions are described in detail within the range of Matrix Solutions, and can include:
- Residual Value Insurance
- Commodity Price Risk Insurance
- Non-Payment Insurance
- Technology Performance Insurance
Using one or a combination of these tools can provide a range of benefits:
- Indemnify lenders against loss of principal and interest
- Harden collateral values to facilitate debt financing
- Protect operating companies against adverse moves in commodity prices
- Remove risk of implementing technology processes in executing projects or corporate growth plans
- Make capital, whether debt or equity, easier to find and close, and priced more efficiently even after the premium cost is factored
Matrix has worked with a wide range of prospective users of insurance wrappers, who approach risks from a number of different perspectives:
- Corporate ownership or management
- Project finance sponsors
- Bank and non-bank lenders trying to attain specific credit profiles for their balance sheets
- Owners of or Investors in equity
- Private Equity sponsors