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Member, Beacon International Group, Ltd.
LONDON—Zurich Financial Services Ltd. has launched a new alternative to letters of credit for captives.
Called eZ Trust, the service will allow Zurich's U.K. clients to forgo letters of credit, instead giving Zurich control over a portion of the captive's investment portfolio.
The London-based program will not be a lien, but rather a trust arrangement where an investment manager serves as the trustee over the assets in the trust fund, a Zurich spokeswoman said in an email. The fund itself will act as collateral for captives where Zurich is the fronting insurer. During that time, the depositor also can earn income on the investments, Zurich said.
Other benefits include simplified legal agreements and less-expensive setup costs compared with cash-backed letters of credit. The insurer has pre-negotiated discounted bank fees and agreed upon legal contracts with a panel of financial institutions.
The trust is evergreen, so no yearly renewals are necessary.
For more information, contact James Donald, global head of credit risk management, at james.donald@zurich.com; Veronique Meautte-Evans, head of captive services and alternative risk transfer at Veronique.meautte-evans@zurich.com; or Alex Wainwright, underwriter for captive services and alternative risk transfer, at alexander.wainwright@zurich.com.