Marsh: Ship Owners Facing Increasing Risk of Charterers' Default
Broker Launches Innovative Solution to Protect Owners’ Revenue Streams
Ship owners are becoming increasingly concerned about the financial consequences of a rise in ship charterers filing for bankruptcy. In order to protect owners’ vital revenue streams from this risk, Marsh today launched Charter Default, an innovative solution that provides a mix of fixed recovery guarantee and credit insurance, tailored to the ship owner’s particular requirements. Charter Default is backed by both insurers and a leading investment bank.
Covering both outstanding debt at the time of insolvency and the loss of future revenue for a set period, Charter Default de-risks important revenue streams, thereby assisting owners to attract better terms from lenders by reducing counterparty credit risk.
Nick Roscoe, a Managing Director in Marsh’s Global Marine Practice, said: “The risk of ship charterers defaulting has increased since the global financial crisis. Companies with ships on charter are exposed to loss of revenue if their charterer folds or administrators force a renegotiation of terms. This product provides a secure framework for owners to grow their business with new clients and in new economies.
“Our Charter Default product is a real financial market innovation that addresses a core concern of ship owners around the world. It not only will protect owners’ balance sheets but will also provide additional comfort for their key business stakeholders,” Mr Roscoe added.
Working with insurers, Marsh has developed specific policy wordings that provide a range of options to suit the credit insurance needs of ship owners of all sizes and complexity. In particular, Marsh has secured significant additional capacity through a proprietary credit insurance policy with Lloyd’s syndicate, Chaucer. Policies are tailored to the needs of individual owners with flexible indemnity provisions and event triggers. These policies are designed to lock in anticipated profit and protect owners’ capital investment in their ships.
Marsh, the world’s leading insurance broker and risk advisor, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has over 24,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a member of Marsh & McLennan Companies, a global professional services firm with 51,000 employees worldwide and annual revenue exceeding $10 billion, which is also the parent company of Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. Its stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. Follow Marsh on Twitter @Marsh_Inc. or visit usa.marsh.com to learn more.