Parties requiring collateral can receive a K-Note to support a variety of business or investment needs by entering into a transaction with Karson Collateral (a Collateral Transaction) under which they request issuance of a K-Note.
The K-Note is issued on behalf of a client (Client or client entity requesting the issuance of a K-Note, the Applicant) for the benefit of a specified party (the Beneficiary) where the Beneficiary will have the right to draw on (i.e., demand payment) if pre-agreed events / conditions are met.
The K-Note, while originally designed as an alternative form of collateral for life insurance reserves under Regulation XXX, can be used to meet the collateral requirements related to other insurance and non-insurance areas.
Ongoing and increasing collateral requirements for:
- Life Insurance (Regulation XXX and AXXX)
- Property & Casualty (new Canadian and Australian rules, Solvency II in EU)
- Insurance-Linked Securities Transactions
- Oil and Gas and Mining Site Decommissioning
- Workers Compensation
Increased Capital Adequacy, Risk-Based-Capital and Liquidity requirements for competitors:
- Basel III
- Solvency II
- Rating Agency requirements
- Banks seeking to reduce balance sheet aggregates
- Equipment leasing companies seeking financing for new equipment
- EU regulations