American International Group, Inc. (AIG) has launched Collateral Flex Option (CFO), a new risk financing option for companies with large deductible casualty insurance programs in the U.S.
CFO provides an alternative for companies that would otherwise need to tie up capital or maintain costly lines of credit to meet the collateral requirements that come with large deductible policies. The CFO option is available for a range of companies, including smaller firms that may have yet to earn an investment-grade rating.
“Posting letters of credit or other forms of collateral for large deductible insurance programs can exacerbate the challenges companies already face with tight credit markets,” said Russell Johnston, product line executive, U.S. and Canada.
CFO is available to qualified AIG clients as a way of deferring collateral requirements by up to 50 percent on large deductible workers compensation, general liability, and commercial automobile liability insurance policies, on an annual basis. Annual CFO amounts deferred for all policy periods of the company’s insurance program with AIG can range from a minimum of $500,000 to a maximum of $5 million, subject to a limit of 50 percent of the insured’s total annual collateral posting requirement.
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