Residual Value Insurance
Residual value insurance ensures that a properly maintained asset will not be worth less than a specified amount on a specified date, such as upon the expiration of a lease. The insurance protects the insured from losses due to greater-than-expected declines in the market value of an asset.
At Securita Re, our specialists work with a wide range of clients to ensure that their Residual Value Insurance protects them and that the agreed future value of an asset where the financing does not fully payout at the expiry of the period the insurance policy will pick up.
Wordings are carefully tailored, with proper asset (Examples below) valuation, to meet your outlooks.
Examples of this are:
In addition to the above asset classes, if the asset has a liquid secondary market with low obsolescence, together with accessible market data, we will consider extending cover.
The potential future value of the asset often becomes a balloon payment on the part of the lessee – borrower, and that can be insured.
In some jurisdictions, the insurance can be used by lessors for accounting purposes to obtain enhanced income recognition from leases and by manufacturers to recognize the profit in a sales transaction with a buy-back.
The policy has an A rating and typically its period can range from 3 to 12 years depending on the asset class with few restrictions of jurisdiction.