The Compliance Buyer (“CB”) buys ER’s before they are generated, to offset against its own business’s future production requirements and it may also trade a proportion of the ER’s which become surplus to its needs. The CB may or may not be an equity investor in the PC or in companies connected with it. The current price paid to the PC is, however, a small fraction of the expected future value of the ER’s, because of the many risks of non-delivery.
The Supplier may be a supplier of capital equipment and, if accepting future ER’s as part of the security for its finance package, will wish to on-sell the ER’s. The Supplier may or may not be an equity investor in the PC or in companies connected with it. The current value assigned to the ER’s is, however, a small fraction of the expected future value because of the many risks of non-delivery.
By insuring against some of the risks of ER non-delivery, our policies give a CB greater security that ER’s will be available to it in time to meet its compliance obligations and a Supplier either better security, or the ability to offer better credit terms, which therefore lessens the PC’s project finance needs.
Policies can include as few or as many insurable risk as the Insured wishes to lay off, although certain risks do become uninsurable if the CB is an equity (or quasi-equity) investor in the Project.
If the Insured is trading some of the ER’s and wishes to add third parties as direct beneficiaries of the policy, then we additionally require from it various Representations and Warranties concerning its continuing involvement with the Project.
Payment of claims is within 120 days of the contractual delivery date of the ER’s.
Policies and any discussions relating to them are confidential and should not be disclosed to the PC without our prior approval.
Premium is payable and is fully earned at inception.
We offer the following options:
1. Fixed value (agreed at inception)
2. Floating (market value at the date of scheduled delivery)
3. Replacement ER’s (or equivalent compliance instrument)
Policies incorporate appropriate deductibles, dependent on the interests of the Insured.
Pre-registration risks can be covered for the amount paid in advance to the PC for the ER’s.