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Risk Participation Agreement – Credit Insurance for Quota‑Share Receivables Financing
Implementation of a credit insurance policy in connection with a Risk Participation Agreement (RPA) supporting a receivables purchase facility granted to a major Corporate in the information‑technology sector.
The purpose of the transaction was to enable the financing bank to obtain capital relief under the CRR framework while securing a significant tranche of receivables through a tailored insurance structure.
The AU Group team
Nuria Gorog
Co-Head of AU Group Structured Solutions & Political Risks
Challenge addressed
Designing a credit‑insurance solution adapted to a complex financing structure involving multiple parties (agent, participants, insurers).
Ensuring compliance with European regulatory requirements (CRR) while preserving margin efficiency.
Key challenge: Demonstrating to insurers that, despite the quota‑share aspect of the receivables, the documentation and policy wording provided sufficiently robust recovery prospects in the event of a claim.
- Role
- • Structuring the risk syndication with targeted insurers & negotiating detailed wording for the credit insurance policy to ensure regulatory effectiveness and operational clarity.
- Sector
- Information technology
The proposed solution
AU Group advised and supported a European financial institution in the implementation of a credit‑insurance policy related to an RPA originated by a leading global bank.
The facility financed receivables owed by a European IT-sector buyer. The insurance policy provided protection against comprehensive non‑payment risk, with minimal exclusions and carefully calibrated conditions. The total insured amount exceeded USD 100 million.
After extensive negotiations with the insurance market and legal advisers, coverage was secured from several AA/A+ (S&P)‑rated insurers, ensuring:
- CRR recognition for capital‑relief purposes
- Optimised return on capital for the insured institution
Our expert's opinion
Through this credit‑insurance structure, the insured bank was able to meet its client/partner’s needs and join a facility involving counterparty risk aligned with its internal standards, while preserving margins in a highly competitive environment.
Nuria Gorog, Co-Head of AU Group Structured Solutions & Political Risks
Our role and contribution
- Delivered a sophisticated credit‑insurance solution within a quota‑share receivables financing framework—a structure that remains challenging for insurers.
- Secured a policy enabling capital relief strictly aligned with CRR requirements.
- Arranged a successful syndication with AA/A+ S&P‑rated insurers
- Margin optimisation.
Results
Insured amount
+ $100M
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