Consortium Contracts Captive Techniques for Managing the Diverse - - PowerPoint PPT Presentation

▶
consortium contracts
SMART_READER_LITE
LIVE PREVIEW

Consortium Contracts Captive Techniques for Managing the Diverse - - PowerPoint PPT Presentation

Mar 31, 2023 259 likes •464 views

conference & convention enabling the next generation of networks & services Consortium Contracts Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda Submarine Networks Division NEC Corporation 1 conference

slide-1
SLIDE 1 enabling the next generation of networks & services

conference & convention

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

Shota Masuda

Submarine Networks Division NEC Corporation

1

slide-2
SLIDE 2 enabling the next generation of networks & services

conference & convention

2

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Presenter Profile

Shota Masuda graduated KEIO University in 1989 with a Bachelors Degree of Law, and started his twenty-one year career with NEC

  • Corporation. His entry into Telecommunications

started with international sales looking over India, Nepal, Bhutan and later on the Thailand

  • market. He then moved on to a role creating

Project Finance and managing Credit Risks. Later on, he became involved in sales of Submarine Cable Systems for a few years, but was called back to Risk Management with the burst of the IT bubble. During the crisis, he clear enormous amounts of bad claims, including several Chapter 11 cases. He is now back in the Submarine Cable industry, responsibilities include among others, Risk Management. Shota Masuda Senior Manager Submarine Network Division NEC Corporation ✉ smasuda@da.jp.nec.com ☎ +81 3 3454 1111

slide-3
SLIDE 3 enabling the next generation of networks & services

conference & convention

3

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 1. So, Where Are We?
slide-4
SLIDE 4 enabling the next generation of networks & services

conference & convention

Ad Hoc Consortiums

4

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

  • Mostly National Flag Carriers
  • Strong Support from Respective Governments
  • Similar Credit Risk Profiles (synonymous to Sovereign)
  • Payment Risk : More or less “Equal” in “Size” & “Quality”
  • Managing Credit Risk was relatively “Easier” than today
slide-5
SLIDE 5 enabling the next generation of networks & services

conference & convention

and Things Changed….

5

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

slide-6
SLIDE 6 enabling the next generation of networks & services

conference & convention

6

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 2. Consortium Contracts
slide-7
SLIDE 7 enabling the next generation of networks & services

conference & convention

7

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

  • Entrance of Profit Seeking Private Carriers
  • Less Support from Respective Governments
  • Diversity of Credit Risk Profiles (Difference in Size / Quality)
  • Managing Credit Risk: Extremely complex to Balance
  • Many Challenges which did not exist before

Consortiums of Today

slide-8
SLIDE 8 enabling the next generation of networks & services

conference & convention

8

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 3. Managing Risk with Insurance
slide-9
SLIDE 9 enabling the next generation of networks & services

conference & convention

Purchaser Purchaser Supplier Supplier

Supply Contract Supply Contract

Bank Bank

Fee Fee Collateral Collateral Letter of Credit Letter of Credit

Documentary Credit Instrument

slide-10
SLIDE 10 enabling the next generation of networks & services

conference & convention

Purchaser Purchaser Supplier Supplier

Supply Contract Supply Contract

Insurance Insurance Company Company

Premium Premium

Risk Cover Risk Cover

Manage Payment Risk by Insurance

  • Instrument to hedge Non-Payment

Risk of a certain Purchaser

  • NEXI / Payment Insurance are not

All-Mighty

  • Private Carriers must have a sound

Financial History

  • Spin-Off Subs to limit Risk Exposure

are frequently Non-Insurable

slide-11
SLIDE 11 enabling the next generation of networks & services

conference & convention

11

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 4. So, What is the Real Risk?
slide-12
SLIDE 12 enabling the next generation of networks & services

conference & convention

Moody’s Cumulative Default Ratio

12

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

  • Investment grade

“Baa” and above

  • Speculative grade

“Ba” and below

  • Credit Risk Profile

significantly different

  • Telecom is not

immune to payment defaults

slide-13
SLIDE 13 enabling the next generation of networks & services

conference & convention

13

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 5. So, What Should We Do?
slide-14
SLIDE 14 enabling the next generation of networks & services

conference & convention

So, What Can Be Done?

14

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Joint and Several Weight is Shared Several and Not Joint Different Weight Burden

slide-15
SLIDE 15 enabling the next generation of networks & services

conference & convention

15

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Consortium Contracts

Captive Techniques for Managing the Diverse Credit Risk Profiles

  • 6. Let’s Go Captive!
slide-16
SLIDE 16 enabling the next generation of networks & services

conference & convention

Low Frequency Low Frequency High Severity High Severity High Frequency High Frequency High Severity High Severity Low Frequency Low Severity High Frequency High Frequency Low Severity Low Severity Frequency Severity

16

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Insurance Not Required Insurance Un-Available Insurable (Home/Car…) Insurable (Submarine Cable)

Frequency and Severity

slide-17
SLIDE 17 enabling the next generation of networks & services

conference & convention

8 Good Reasons to go Captive!

17

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

  • Reduce and Stabilize Costs over the Long-Term
  • Reduce reliance on Commercial Insurance
  • Enable Control of Underwriting, deciding Premium Rates &

more Control over Claim Settlements

  • Provide Coverage to Subsidiaries and Non-Insurables
  • Recapture Investment Income and Accelerate Cash Flows
  • Enable to take advantage of Insurance Accounting (tax

incentives) and favorable regulations

  • Increase Risk Coverage beyond conventional schemes to

cover Innovative Deals and Structures

  • Enables the Investors of Captive to receive Profit
slide-18
SLIDE 18 enabling the next generation of networks & services

conference & convention

Purchaser Purchaser Supplier Supplier

Supply Contract Supply Contract

Captive Captive Insurance Insurance

P r e m i u m P r e m i u m

R i s k C

  • v

e r R i s k C

  • v

e r

D i v i d e n d D i v i d e n d E q u i t y E q u i t y

18

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

slide-19
SLIDE 19 enabling the next generation of networks & services

conference & convention

19

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Food For Thought !

slide-20
SLIDE 20 enabling the next generation of networks & services

conference & convention

20

Consortium Contracts - Captive Techniques for Managing the Diverse Credit Risk Profiles Shota Masuda, Senior Manager, Submarine Networks Division, NEC Corporation

Visit us at http://www.nec.com/submarine/