One commonly seen transaction is the establishment of a credit facility or letter of credit arrangement between the insurance vehicle and a financial institution or lender (either based in the Cayman Islands or in North America) (a “Financing Arrangement”). Such Financing Arrangements assist insurance vehicles in a variety of ways and smooth issues that may otherwise cause wrinkles in their cross-border business models.
What Transaction Documents Are Standard?
The core transaction document in a Financing Arrangement is a credit agreement (entered into between the lender and the insurance vehicle) which will specify what additional documents the lender will require and in particular what security the lender will require to make the Financing Arrangement available. For the most part, the core transaction documents will be:
On occasion the lender will also require security over shares of subsidiary companies of the insurance vehicle or guarantees of certain individuals/entities to give further comfort to the lender in extending credit.
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Financing Transactions for Cayman Regulated Insurers