Flexibility key to captive collateral

Companies need to have a more flexible approach to collateral due to recent financial upheaval, a panel at the Bermuda Captive Conference has warned.

The panel—which was moderated by Thomas McMahon, executive vice president, Davies Captive Management—included Renee Lewis, head of global trade and receivables finance, HSBC; Steven Gaziano, first vice president, insurance consulting practice, Graystone Consulting; and Jordache Rawson, vice president, Butterfield Group.

The panel agreed that recent years have seen a great deal of global financial upheaval, due to the impact of COVID-19 and the subsequent disruption to the global supply chain, which drove spikes in inflation in many countries.

As Gaziano pointed out, the financial world has been dealing with more than a decade of low or even 0% interest rates but now interest rates are spiking as central banks and governments battle this inflation.

Lewis stressed that it was important to listen to the captive and the client, to find out exactly what kind of collateral would be best for them.

The panel underlined that flexibility and resilience were key factors in the current market and also underlined the part that security plays in the post-COVID-19 era, with banks and other financial institutions increasingly creating secure portals for clients to address worries over cybercrime.