Letter of Credit
When your insured has a need to provide an Lettetr of Credit (LOC) in excessive of $250,000, our Letter of Credit (LOC) Alternative program eliminates drawing on a line of credit or dealing with normal bank sources.

1.    Insured pays a premium to Capital Security (“CSL”) Ltd.

2.    CSL issues a policy to the Insured covering the collateral needed.

3.    CSL has a Letter of Credit sent, to the issuing carrier, from an approved U.S. bank.

FAQS

 

  • U.S. Insurance carriers frequently require collateral when issuing policies where the insured assumes a significant amount of the risk. This is to protect themselves against insured failure to pay these claims obligations
  • Most carriers require a Letter of Credit (LOC) or a Trust arrangement since cash is subject to attachment by bankruptcy courts
  • LOC’s are most commonly use due to ease of use, protection against creditors, and Trust restrictions
  • Insured’s normally draw down on Lines of Credit, which can be expensive and not the intended purpose of the line; or, they have their bank issue on LOC (in effect a loan)

In either case it becomes a Balance Sheet liability which can “stack” up on the Balance Sheet over the years with the usual annual ???????