Structural Risk Mitigation & Transfer
LERM structuring and risk mitigation, combined with the intelligence and risk-sharing expertise of our partners, aims to create a risk transfer of the operational, third-party and where applicable construction and pre-operational project or business elements.
These mechanisms insure the same financial outcome from the project, or business operation, cost effectively and more comprehensively by fully insuring both the buy, operational and sell sides of the project. In essence Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).
LERM, in conjunction with their partner insurance advisers and Lloyds of London identify and structured an all-encompassing umbrella of co-joining policies that will identify and remove all known and unknown risks from the project’s buy, operational and sell side streams.
Thereby, providing coverage that effectively convert project or business risk into credit risk at EBITDA level.
The project risk transfers are broken down into three phases, the first being the Construction Phase, second the Operational Phase, lastly Third -Party risk.
All counter party risk providers are regulated, investment grade entities, and minimum A rated by global rating agencies.
Project Revenue and Principal Guarantees
LERM utilise proprietary techniques and structures in combination with a limited number of market products to provide combinations of principal and revenue guarantees from third-parties providers or existing client preferred financial institutions.
LERM structured Interest and Principal Risk Transfer (IRT/PRT) reduce the risk weight (RW) applied to the covered exposures or reduces the probability of default (PD) or loss given default (LGD) for corporates, sponsors, emerging economies, regulated lenders or private investment.
Risk transfers equivalent to a range of guarantees such as a Credit Default Swap(CDS) or Letter of Credit (LC), but not credit event, default or cashflow linked.
LERM transfer the risk resulting in default, not the default. Enabling greater principal and revenue protection, at lower cost.
In most cases this risk transfer provides 100% principal protection to all stakeholders with investment grade counter parties in all instances.
Designed to provide bullet proof balance sheet through performance enhancing risk transfer, resulting in business, debt and equity cost optimisation.