Karson and BNY Mellon Collaborate on Innovative Capital Financing Transaction
January 19 2016 - 8:00AM
Business Wire
First K-Note Transaction in Canada
Karson Management (Bermuda) Limited and affiliates (Karson), a
provider of reserve, capital and collateral financing solutions,
and BNY Mellon, a global leader in investment management and
investment services, today announced the successful completion of
the first K-Note reinsurance collateral financing transaction in
Canada. The patented K-Note financing platform has been designed by
Karson around a number of BNY Mellon’s corporate trust, custody and
collateral management services.
The multi-million Canadian dollar transaction involved the
issuance and deposit of a K-Note into a reinsurance security
arrangement (RSA) account established in accordance with the
Canadian regulator, the Office of the Superintendent of Financial
Institutions (OSFI). The K-Note is backed by a payment obligation
of a third-party financial institution and a portfolio of
investment assets.
Derrell Hendrix, CEO of Karson, said: “We are pleased to have
concluded this first of what we hope to be many Canadian reserve
financing transactions based on clear guidance from the Canadian
regulator. The Karson program has again successfully transformed
its access to market capacity into the issuance of an instrument, a
K-Note, that satisfied our client’s reinsurance collateral
financing need. We have been able to meet a very challenging client
requirement while continuing to develop a scalable and sustainable
execution platform with our partners at BNY Mellon.”
BNY Mellon is Karson’s service partner of choice and its London
service team was appointed in 2009 for the forerunners to this new
transaction.
“With the influx of new regulations there is a continual need to
scrutinise effective ways of meeting capital adequacy
requirements,” said Dean Fletcher, head of Corporate Trust EMEA at
BNY Mellon. “This is a landmark transaction and will provide a
template for us to work with Karson to help their clients navigate
the new regulatory landscape following the financial crisis.”
Having completed a number of K-Note transactions in the U.S.
between 2009 and 2011, Karson obtained favourable guidance from
OSFI in June of 2011, which OSFI re-confirmed in December of 2013
following a revision of capital requirement regulations for
Canadian insurance and reinsurance companies. Under the
transaction, the K-Note was rated by both Standard & Poor’s and
DBRS.
Notes to editors:
KarsonKarson is a specialist financial solutions
structuring firm established in 2007 to provide an alternative
approach (e.g. capital-markets-funded) for financing “qualifying
collateral” and “admitted assets” for major financial
institutions.
To date, Karson has completed 16 K-Note transactions with $8.2
billion in reserve collateral and capital financing capacity raised
on behalf of its clients. While Karson remains very committed to
its roots in the reserve financing space, it has expanded its
platform capabilities to address financing needs for derivatives
collateral, liquidity transactions and contingent capital
requirements worldwide. Karson is currently launching a unique
asset reclassification and loan transformation platform which will
allow clients to convert illiquid assets and loans into a tri-party
eligible security that can be used for liquidity financing purposes
and general collateral applications.
The Karson platform offers a unique blend of client-focused deal
flexibility within an effective, scalable and efficient execution
framework. This indirectly provides clients with access to an
expanded range of capacity providers, as well as the cost and price
efficiencies of a standardized legal and operating platform.
BNY MellonBNY Mellon is a leading provider of corporate
trust services to the debt capital markets, offering customized and
market-driven solutions to investors, bondholders and lenders. As
of September 30, 2015, BNY Mellon Corporate Trust served as
trustee and/or paying agent on more than 60,000 debt-related issues
globally. The corporate trust business utilizes its global
footprint and expertise to deliver a full range of issuer and
related investor services including trustee, paying agency,
fiduciary, escrow, and other financial services. The business
administers a wide array of assets and types of programs to
multinational corporations, financial institutions, governments and
their agencies, and the banking, securities, and insurance
industries.
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries and more than 100 markets. As of September 30,
2015, BNY Mellon had $28.5 trillion in assets under custody
and/or administration, and $1.6 trillion in assets under
management. BNY Mellon can act as a single point of contact for
clients looking to create, trade, hold, manage, service, distribute
or restructure investments. BNY Mellon is the corporate brand of
The Bank of New York Mellon Corporation (NYSE: BK). Additional
information is available on www.bnymellon.com. Follow us on
Twitter @BNYMellon or visit our newsroom
at www.bnymellon.com/newsroom for the latest company
news.
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version on businesswire.com: http://www.businesswire.com/news/home/20160119005994/en/
KarsonDerrell Hendrix, +44 1372 476
440dhendrix@karson.comorRichard Black, +1 441 236
6813rblack@karson.comorBNY MellonMalcolm Borthwick, +44 20 7163
4109malcolm.borthwick@bnymellon.com
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