CBL Corporation Limited (“CCL”) is a privately owned New Zealand incorporated and headquartered credit and financial risk insurer that has been operating for 40 years. CCL conducts its business through two wholly-owned operating subsidiaries CBL Insurance Limited (“CBL”) and European Insurance Services Limited (“EISL”). CBL is a New Zealand incorporated and licensed non-life insurer supervised and regulated by the Reserve Bank of New Zealand (“RBNZ”). CBL specialises in writing niche building and construction related credit and financial surety insurance, bonding and reinsurance.
Issuer need
CBL has an investment grade rating of B+/bbb- from AM Best Ratings Agency. CBL was seeking additional capital to increase liquid assets and thereby obtain a higher AM Best credit rating. The achievement of a higher rating will open new insurance/reinsurance opportunities, particularly in New Zealand and Asia. Improving the liquidity ratio in line with its peers is a key driver to this outcome.
FIIG Solution
FIIG worked closely with CCL to determine a capital structure that would allow for increased flexibility for future acquisitions and provide the capital/liquidity injection into CBL as they seek to achieve the higher credit rating. By issuing a Senior Secured Note into the holding company, CCL obtained a layer of capital not met by the traditional bank market. The Notes were structured to provide sufficient covenant protection to investors that while providing CCL the flexibility required to efficiently allocate it’s capital.
Client Testimonial
Mr Mulholland said the bond issue offered a number of key advantages over borrowing from the bank including the fact that it was lower covenant.
“It meant that we didn’t have to have the assets identified up front which was a requirement of bank funding and so the process for us was very quick”, Mr Mulholland said.
“That also allowed us to look at a number of opportunities all at the same time without having to go back to the bank every time and try and get their buy-in for it through a structured-type financing arrangement. Because of the bond issue we could go to the table with a war chest behind us which allows us to do a stronger deal.”