Vanbridge, an EPIC company (Vanbridge), a diversified insurance and capital solutions firm and GreensLedge, a global investment banking and advisory firm, announced the formation of their joint venture company, Convergence Point Solutions (CPS), and the launch of its Alternative Letter of Credit (ALOC) Facility, an efficient, off-balance sheet solution for companies to post collateral for Casualty insurance programs.
The ALOC Facility is designed for companies that operate in industries that are required to post significant collateral for their Casualty insurance programs, thereby reducing their credit capacity, impacting liquidity and working capital.
Convergence Point Solutions has developed a groundbreaking alternative to satisfy these traditional collateral requirements through its ALOC Facility, which creates off-balance sheet credit capacity outside the traditional banking system. Companies pay a credit-based fee, and the Facility arranges for an LOC to be issued by an NAIC-approved bank as collateral for their Casualty insurance policies. This replaces and releases their existing collateral dollar for dollar and restores their credit capacity.
What makes the ALOC Facility unique is how Convergence Point Solutions manages the risk in the background. Underlying CPS’s innovative approach includes identifying the collateral as credit risk on a portfolio basis and recognizing the regulatory protections for the true risk of default.
“By leveraging the financial and insurance capital markets together, we have created a solution to solve an insurance-related problem. We expect this solution to be transformative in industries where high collateral requirements are the norm,” said Quentin Hills, Managing Principal at Vanbridge.
Lesley Goldwasser, Managing Partner of GreensLedge, added, “We are excited to partner with Vanbridge and leverage our combined experience and expertise on this innovative solution that addresses a specific market need.”
The structure is primarily focused on providing liquidity to clients in a cost-effective manner. “We see this as a game-changing solution for these companies. Restoring their working capital capacity can substantially improve their operational capabilities, making it easier for them to adapt to market conditions and pursue growth opportunities,” said Philip V. Moyles, Jr., Managing Principal and CEO of Vanbridge.
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