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Debt purchase scenarios

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Debt purchase – Debt purchase scenarios

Insolvency administrator –residual debt
•Bar date published for all creditors of UK insolvent estate
•150 reinsurers with combined incurred book value of $20m remaining despite successful commutation strategy for reinsurance debt
•Following conclusion of scheme of arrangement the insolvent estate would remain open to deal with this residual debt
•Pro purchased residual reinsurance book in it’s entirety
•Benefit to the client: Enabled the scheme administrator to close the estate

 

Creditor of an insolvent estate
•Debts owed by insolvent estate (Liquidation, Rehabilitation or Scheme of Arrangement)
•Expectation of partial dividends to be paid against agreed claims but not expected to payout for several years or in instalments
•Pro purchased the future dividend stream
•Benefit to the client: Accelerated cashflow and certainty of outcome from an insolvent estate along with the release of bad debt provision

 

Low value / low priority debt portfolio
•Quota share contract with 20 reinsurers and book value around $2m
•Large multi line insured with limited resource allocated toward collection of debt
•Growing aged debt problem, potential technical queries and problematic reinsurers to collect from Pro purchase the debt relating to the contract for a fixed fee plus profit share arrangement
•Benefit to the client: Elimination of reinsurer credit risk from aged debts, accelerated cashflow and possible upside from Pro collection success

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