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Liquid insurance contracts

Inactive Publication Date: 2009-12-17
LIC DEV
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  • Summary
  • Abstract
  • Description
  • Claims
  • Application Information

AI Technical Summary

Benefits of technology

This solution allows for quick movement of capital in response to events, improves transparency in risk transfer, and enables efficient allocation of capital to underwriters, promoting operating efficiencies and the rapid creation of new insurance solutions by separating suretyship and risk transfer functions.

Problems solved by technology

Secondly, it enables investors to rapidly bid up the value of such underwriters when events favor them, and bid down the value of such underwriters when events are unfavorable to them.

Method used

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  • Liquid insurance contracts
  • Liquid insurance contracts
  • Liquid insurance contracts

Examples

Experimental program
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Embodiment Construction

[0058]In the following description, the topics outlined below will be keyed to the drawings indicated.[0059]I. Overview Of An LIC System—FIG. 1[0060]II. Preparation For An LIC Issued By The Company Originally Bearing The Risk(s)—FIG. 2[0061]III. Bundling Of Insurance Or Reinsurance Policies For An LIC—FIG. 3[0062]IV. Creation Of LICs Based On Indexes—FIG. 4[0063]V. Creation Of LICs—FIG. 5[0064]VI. LIC Initial Offerings—FIG. 6[0065]VII. Auction Of Shares—FIG. 7[0066]VIII. LICs With Detachable Provisions, LIC Options Or LIC Futures—FIG. 8[0067]IX. Bond With Detachable LIC—FIG. 9[0068]X. Creation Of Exchange Traded Futures And Options—FIG. 10[0069]XI. Operation Of An LIC Exchange—FIG. 11[0070]XII. Operation Of An LIC Underwriter—FIG. 12[0071]XIII. Surety And Collateral Arrangements For LICs—FIG. 13[0072]XIV. Calculation Of Surety Or Collateral Amounts For Exchange-Traded LIC Contracts—FIG. 14[0073]XV. Creating One Or More Derivatives From A Single Existing LIC—FIG. 15[0074]XVI. Creatin...

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Abstract

A liquid insurance contract (LIC) comprises a security which is traded or tradable and which has cash flows to the issuer based upon a liability whose exact value is unknown at the time of issuance. A method for creating and trading these LICs, as well as other financial products derived from LICs, may include any of the following steps: writing at least one LIC; preparing regulatory filings for at least two LICs; issuing the two LICs; preparing regulatory filings for a financial product which includes at least one detachable LIC provision; issuing the financial product; creating at least one underwriter as a closed end fund owned by a parent company; placing ownership of at least a portion of an issue of the financial product in an underwriter owned by a parent company; spinning off the underwriter from the parent company using at least one stock dividend; trading shares of the underwriter; reporting information on trades and positions of the underwriter; and valuing the underwriter using analytic modeling, sensitivity testing, portfolio analysis, and / or investment analysis.

Description

CROSS REFERENCE TO RELATED APPLICATION[0001]The present invention claims priority from U.S. Application No. 60 / 238,798 filed Oct. 6, 2000 entitled “Liquid Insurance Contracts”, which is incorporated herein by reference.FIELD OF THE INVENTION [0002]The present invention relates to a mechanisms and methods for creating and trading and otherwise managing financial risk.BACKGROUND OF THE INVENTION[0003]The need of individuals, businesses, government agencies and other entities to transfer risk from time to time is well known. Many financial instruments transfer financial risk, each in its own way. Insurance is a particular class of financial instruments in which risks are defined by contract and explicitly transferred from one party (the insured) to another (the insurer). Reinsurance is a particular class of financial instruments in which risks are defined by contract and explicitly transferred from an insurer to another party (the reinsurer). By general and common interpretation, these...

Claims

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Application Information

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Patent Type & Authority Applications(United States)
IPC IPC(8): G06Q40/00
CPCG06Q40/00G06Q40/02G06Q40/08G06Q40/06G06Q40/04
Inventor VAN SLYKE, OAKLEY E.WHITWORTH, BRIAN L.
Owner LIC DEV
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