This document describes Meridian, a structured insurance and reinsurance arrangement for construction businesses. It explains how participants can combine comprehensive cover for plant and equipment with the opportunity to share in underwriting profits through an offshore cell captive. The three-tier structure includes local insurance, an offshore cell captive, and commercial reinsurance.
This document presents Meridian, a structured insurance and reinsurance programme designed for construction businesses. It offers comprehensive cover for plant and equipment while allowing participants to share in underwriting profits through effective risk management.
The service works through a three-tier structure. Tier 1 is local insurance cover from a South African insurer for claims up to an agreed annual limit. Tier 2 is an offshore cell captive in Bermuda that reinsures claims exceeding that limit, with each participant having a dedicated Experience Account. Tier 3 is commercial stop-loss reinsurance for exceptionally high claims.
An Experience Account is a dedicated account within the offshore cell captive. A portion of each participant's annual premium is allocated to this account. Funds not used for claims accumulate over time, and once the balance exceeds a set threshold, the surplus may be withdrawn or invested offshore.
The document includes an illustrated example showing potential growth of an Experience Account for an insured portfolio of R500 million with an annual premium of R10 million. It assumes a 45% claims ratio in the central scenario, with upper and lower projections 10 percentage points above and below. Investment returns of 5% and 15% are assumed for unvested and vested funds respectively.
Meridian turns insurance expenditure into financial value by allowing businesses to retain a share of favourable underwriting results. The document invites confidential discussions to assess suitability, considering fleet size, current insurance arrangements, historical claims, and risk management practices.