Raj Shourie, from Lockton's political and credit risks division, discusses how he will lead the firm's engagement with financial institutions internationally for both credit mitigation and country risk protection

Q: Your role means that you will be responsible for leading the engagement with financial institutions internationally out of London, for both credit mitigation and country risk protection.  Tell us more about what that will entail.
A: I’ll be responsible for originating business dialogue with banks and funds, targeting new users of credit and political risk insurance and existing users in respect of new risks.

Q: Which factors are behind Lockton’s move into this space and what challenges are you hoping to help your clients address?
A: The financial institutions sector has always been a key client segment for Lockton. The ongoing bank capital regulatory changes, alongside the increasing activity of funds in developing markets are simultaneously generating additional opportunities to grow market share.

Moreover, the wallet from financial institutions is increasing as part of the overall credit and political risk insurance (non-trade credit) wallet. Lockton is keen to ensure that it is well positioned to capture a share of this increase in the market.

Q: Can you provide more detail about the types of credit mitigation tools Lockton will offer for banks seeking to use insurance as a credit risk distribution and capital efficiency tool?
A: The types of credit mitigation tools we’ll offer range from bilateral and syndicated insurance contracts on unsecured, asset or project-backed loans to bespoke securitisation structures.

Q: Synthetic securitisation will presumably play a role, but is this likely to include capital relief trades?
A: It will certainly play a role, and the dialogue with respect to synthetic securitisation structures will revolve around capital and significant risk transfer.

Q: How will the transactions combine insurance and capital market investors? Are the deals likely to be innovative or structurally complex?
A: Certain bank balance sheet securitisation opportunities may provide the opportunity and require the need for risk protection from both funded capital markets investors and insurers. Given the bespoke nature of these transactions, structures will continue to evolve.

Q: Will Lockton be acting as arranger, placement agent or broker in these deals?
A: Lockton will act as insurance broker.

Q: How are you anticipating expanding the firm’s footprint in the credit insurance and credit risk areas?
A: In terms of our future credit insurance and risk offering, we will continue to engage with banks and funds who are potential new clients for Lockton.

Q: What is in the pipeline for the rest of 2021?
A: We’ve begun discussions on a target list of banks and funds, consisting of existing and new users of credit and political risk insurance.  As these discussions develop and progress is made, we expect to turn these into potential opportunities which will then hopefully lead to executed transactions.

Angela Sharda