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Transcript of BANK SURETY SYNDICATION DESK - Home - ICISA · 2019-10-10 · Syndication Leader. FILE 2014091....
BANK SURETY SYNDICATION DESK
David Moylan
Chairman Global Surety Practice
Manuel López
Global Bank Surety Leader
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MARSH
Banks still dominate – This is our opportunity!
2 September 24, 2014
2014 Global Surety Market
Estimated $10-11 bn written premium
US/Canada $6 bn LAC $2.1 bn Europe $1.5 bn Africa, Australia, Asia $1 bn
Excellent Results
55-60% estimated combined ratio in the Americas Combined ratios in other geographic regions well within profit zone
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Premiums, Claims, Claims Ratio
3
Source: ICISA
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Insured Exposure
4
Source: ICISA
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MARSH 5 24 September 2014
Bank Guarantee and Surety Market
Potential
EUROPE USD 1.5bn
GLOBAL USD 12bn
around 80% of guarantee business in Europe is carried out by banks
Estimated surety written premium per year
Estimated surety written premium per year
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New ideas and ways of doing business
will become a major differentiator and competitive advantage
Higher capital requirements in qualitative and quantitative terms have an impact on banks’ risk appetite, earnings and business models
Regulation is changed client needs have not
Challenging Banking Environment
As a consequence of much higher capital constraints,
banks’ risk appetite is increasingly reduced
becoming a major hurdle and sometimes even impeding new business
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RWA of 50% because of existing collateral
100 €
50 €
4 €
before risk transfer to insurer(s)
100 €
20 €1.6 €
after risk transfer to insurer(s)
Capital Requirements 8% RWA
Risk weighted assets (RWA)
Exposure Exposure
Risk weighted assets (RWA)
Capital Requirements 8% RWA
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Increasing profitability and single deal risk appetite of underlying trade finance operations De-risking to comply with capital restrictions: Alternative to winding down credit positions Releasing capital for re-deployment: Competitive advantage for banks
Increased RWA efficiency
Above return will be further improved by saved capital costs of appr. EUR 240k to € 360k (estimated capital costs of 10 -15%) by reducing capital allocation by € 2.4 mn (=€ 4 less € 1.6 mn)
Profitability: 150 bps / 1.50 €
Return on RWA: 3%
Base profitability: 150 bps / 1.50 € Premium: 50 bps / 0.50 € Underlying profitability: 100 bps / 1.00 € Return on RWA: 5%
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Strategic Solutions for Banks and Sureties
Risk Distribution. In light of the banks increasingly reduced risk appetite as a consequence of capital constraints, effective and efficient risk distribution is becoming crucial for delivering the bank’s
client, risk and business strategy. This is especially important for high-volume and relatively low-priced guarantee lines.
Global Partnership between Banks and Sureties. For this reason Marsh offers a global partnership between banks and sureties on a worldwide basis leveraging existing Marsh bank relationships on other products and in-depth knowledge of the banks’ organization, processes and
their different business models and strategies.
MPA. Specifically, risk transfer to this global risk platform is delivered also through a general framework contract in form of a silent, risk participation agreement (Master Participation Agreement “MPA”) which has the following features:
Regulatory compliant counterparty risk transfer, representing the equivalent of an irrevocable,
first demand guarantee obligation
Meets the international bank standard requirements for such transfer solutions
Globally accessible risk and collateral sharing solution giving access to high volume of bank guarantee deals
Pre-agreed panel of surety insurers
Silent and undisclosed risk participation
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Strategic benefits of this innovative partnership include:
Access to profitable high-quality deal flow and already booked deals sharing existing collateral
No additional investments necessary
Focus on sureties’ core competence underwriting
Benefit from Marsh core competence distribution and specific knowledge of bank client needs (including regulatory requirements, organizational set-up, decision processes, local and regional particularities) delivering specific tailor-made solutions
Leverage the existing Marsh’ global surety expert network (over 240 people worldwide) and the multi-entry and product strategy
Benefit from existing (some exclusive) and new relationships of the MMC organization in the banking world
Innovative and unique bank syndication desk approach steered by a bank syndication task force with decades of international commercial bank and surety experience
Implementation of the MPA in different regulatory environments achieving limit and capital relief
The MPA-approach sets the framework; every single deal will be judged on its own merits
Strategic Solutions for Sureties Benefits
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MARSH 10 September 24, 2014
Marsh Global Surety Practice
Global Risk Practice –
Combination of International, US and Canadian Surety Businesses
- All surety operations report into Practice and Geography - Top line growth, client retention and direct margin driven - Investment decisions jointly made, driven by Practice - Performance goals set within Practice, with Geography agreement
234 global surety colleagues
Place over $600 million of surety premiums into global market
Teamwork, communication, and collaboration are critical for success
Innovation & market relations key
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OUR VISION
The Marsh Global Surety Practice
will bring together
the scale, scope and intellectual capital of the organization
to deliver innovative surety risk solutions
to our clients
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Global Surety Team
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Global Expertise
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David Moylan Global
Surety Practice Leader
Vincent T Moy ASIA
Surety Practice Leader
David C. Moylan EMEA
Surety Practice Leader
Drew Brach US
Surety Practice Leader
Hernan Monroy LATIN
Surety Practice Leader
Patrick Baker CANADA
Surety Practice Leader
Beijing , CHINA Robinson Zhang
Tokyo , JAPAN Hiro Kinoyama
Seoul , KOREA KK Yoon
SINGAPORE Jimmy Kho
, Sydney , AUSTRALIA
Eric Wojcik
UNITED KINGDOM Steven Lewis / Rob Ling
Milan , ITALY Marco Bagattin
Madrid , SPAIN Javier Samaniego
Gonzalez
Brussels , BELGIUM Stefaan Germonpre
Paris , FRANCE Karim Khedimi
Munich , GERMANY Thomas Dusny
Johannesburg
,
SOUTH AFRICA Lynn Harrod
Santiago , CHILE Jorge Veloso
Caracas , VENEZUELA Jose Villasmil
Montevideo , URUGUAY Sergio Aboy
Lima , PERU Enrique Matallana
San Juan , PUERTO RICO
Francisco Tirado
Buenos Aires , ARGENTINA Gonzalo Rigo
Sao Paulo , BRAZIL Silvia Vergara
Mexico City , MEXICO Miriam Cassis
/ Marisol Giribet
Contract , US . (TBD)
Commercial , US Joseph Poplawski
Surety Practice Leader
East Zone , US John O’Keefe
Central Zone , US Phil Neighorn
West Zone , US Jeffrey Strassner
Toronto , CANADA Shane Sinclair
Dusseldorf, GERMANY
Manuel Lopez
Manuel Lopez Global Bank Surety Syndication Leader
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VALUE PROPOSITION
Through Marsh‘s Bank Surety Syndication Desk
sureties obtain global and systematic access
to new high-quality deal flow from banks.
This is achieved by leveraging decades of specific
bank experience and technical knowledge
delivering specialist solutions to sureties and
banks
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Marsh & McLennan
MMC
140-years history
Serve 75% of Fortune 1000 companies
Approximately 55,000 colleagues
Serving clients in more than 130 countries
Marsh
Largest broker by revenue
$ 50 bn insurance premium placed
Approximately 25,000 colleagues
Marsh serves 87% of the Fortune Global 500
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