Isle of Man
Aon Credit International | Aon | UK

Aon Credit International - Case Studies

 

Surety Bonds   

  • Leading FTSE listed ‘Employer’
  • £billion Defined Benefit Pension Deficit
  • Repayment plan to repay deficit over multiple years
  • Pension Scheme runs a credit risk on the Employer

  • Guarantee issued by a surety provider guaranteeing the repayment obligations of the Employer
  • Repayment plan extended and annual payments to the Scheme reduced = Improved cash flow for the Employer
  • Pension Scheme secures credit risk of the Employer
  • Cost of surety competitive and unsecured facility so no impact on bank credit lines

 


Pension Guarantee   

  • Leading FTSE listed company ‘Employer’
  • £1b+ defined benefit pension deficit
  • Repayment plan to repay deficit over multiple years
  • Pension Scheme runs a credit risk on the Employer

  • Guarantee issued by a surety provider guaranteeing the Employer repayment obligations
  • Repayment plan extended and annual payments to the scheme reduced = improved cash flow for the Employer
  • Pension Scheme secures the credit risk of the Employer

 


 

Duty Deferment Guarantee   

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  • Leading Global Food & Drink Retailer importing goods from Asia
  • Duty Deferment account set up to defer payment of duty and VAT by 45 days
  • £20m bank guarantee issued to HMRC covering the maximum value of duty deferred
  • Cost to treasury of issuing guarantee
    • Fee payable to the banks for Bank Guarantee
    • Bank credit line reduced by value of Guarantee

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  • Bank Guarantee replaced by a Surety Guarantee
  • HMRC accepted the Surety Guarantee as acceptable security (provider rated AA- by Standard & Poor's)
  • Cost of Surety Guarantee less than the cost of a bank guarantee (20 basis points versus 45 basis points for bank guarantee)
  • Surety is an unsecured facility and with no commitment charge. Fee paid on the value of the bond issued
  • £20m of bank credit line freed up, to be reinvested in the business

 


 

Receivables Finance   

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  • Global natural resources company
  • Undertaking a major capex cycle with a capital burden for 3 – 4 years
    • Upgrade of Australian facilities
    • 25 projects across Europe
  • Leveraged business

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  • EUR 60 m off balance sheet receivables finance facility
  • Provided by KBC Commercial Finance
  • Credit insurance wrap provided by Atradius (A (excellent) rated by A.M Best)
  • Credit limit acceptance rate in excess of 95%
  • Committed credit limits with 90 days notice period

 


 

Automotive   

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  • Premium automotive manufacturer with significant global trading exposures and projections
  • Committed insurance lines / bespoke policy wording to support access to trade finance
  • Insurer diversification to ensure equitable stake holder exposure in line with corporate governance
  • Excess lines insurance to ensure maximum cover is available to meet manufacturing demands

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  • Sophisticated centralised credit management and local strategic resource has created insurer leverage for premium, cover and claims
  • Non-cancellable credit limits and common policy disciplines across the programme to ensure consistency and ease of administration
  • Multi-insurer programme to achieve insurer diversification and widen the pool of credit intelligence and underwriting resource
  • Non-cancellable excess lines affording immediate access to cover with premium payable on utilised exposure

 


 

IT   

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  • Leading global financier in IT channel
  • Concentration risk on 4 largest group exposures increased significantly in recent years ($bns)
  • Need to review and increase level of risk mitigation
  • Desire for insurer diversification

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  • Syndicated programme delivering full coverage requirements across 4 global buyer groups
  • Placement across 7 carriers, leveraging client’s wider global insurer relationships outside trade credit insurance
  • Bespoke policy wording providing ease of management and consistency globally
  • Non-cancellable limits = certainty of cover for key buyer exposures

 


 

Media  

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  • A large and complicated programme with over 400 individual companies, 200 policies leading to over 3,400 invoices being raised for premiums / limit fees
  • Collecting turnover declarations across such a large network and then managing the adjustments proved very time consuming
  • The premium level has been hard to justify due to a cost of capital issue

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  • Arranged for one lead policy per country with all other companies added as joint insureds and access to information managed at individual company level, reducing the number of invoices.
  • Negotiated a policy on a fixed premium basis with no annual premium adjustment
  • Obtained a premium reduction with an additional premium clause if total credit limit value exceeds 60% of the premium
  • Created a training module to go through the risk assessment process and how credit limit decisions are made

 


 

Telecoms  

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  • Leading UK broadcaster
  • Undertook a broker review followed by an insurer review following 15 years with the same provider

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  • Aon chosen after a lengthy review due to trade sector expertise, market knowledge and the appointed client team
  • Market review undertaken resulting in a 24% premium saving, improved bonus structure and extended non-cancellable cover period for key customers
  • Terms agreed for a 3-year period giving the client certainty of cover and price

 


 

Food & Drink   

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  • Leading British dairy products company with turnover of £1.390bn
  • Broad spectrum of buyers from leading UK grocers to doorstep milk delivery
  • Requirement to:
    • Reduce bad debt reserve
    • Increase sales
    • Formalise procedures across divisions

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  • Policy placed with leading credit insurer, based on the whole turnover but excluding the major grocers, giving a high level of risk transfer thereby significantly reducing the bad debt reserve
  • Credit limits agreed on some difficult risks based on the clients experience and relationship with their customers
  • High degree of flexibility, allowing the client to set a number of their own customer credit limits to support sales
  • Extremely competitive premium and policy structure negotiated

 

 

Page last updated 3 February 2017

Aon UK Limited is authorised and regulated by the Financial Conduct Authority in respect of insurance mediation activities only. FPACI001.4.16