Liquid insurance contracts

A process which transfers risk related to insurance policies, said process comprising:

• issuing one or more insurance policies;
• and
• creating an exchange-traded security which obtains future cash payments in consideration of expenses or payments under the one or more insurance policies.

Exchange traded futures or options on liquid insurance contracts, consisting of:

• a standardized, transferable, exchange-traded contract that requires delivery of a defined LIC contract at a specified price, on a specified future date.

A method of transferring all or a portion of LIC risk using exchange traded futures, options, or futures and options, the method comprising the step of:

• entering into one or more contracts selected from the group consisting of exchange traded futures contracts and exchange traded options contracts, wherein LIC risk of at least one party to at least one contract is mitigated.

A method of issuing a bond with a detachable risk security wherein:

• a new exchange traded security related to one or more risks of the issuer is created along with a bond;
• and
• detachable contracts related to the traded security are issued in conjunction with the bond.

The process of creating futures based on LICs or indexes of LICs, wherein:

• an existing LIC, group of LICs or LIC index contract is selected;
• and
• a standardized, transferable, exchange-traded contract is created that requires delivery of the selected LIC, group of LICs, or LIC index contract at a specified price, on a specified future date.

The process of creating options based on LICs or indexes of LICs, wherein:

• an existing LIC, group of LICs or LIC index contract is selected;
• and
• a standardized, transferable, exchange-traded option contract is created that provides the holder the right, but not the obligation, to buy or sell a specific amount of the selected LIC, group of LICs or LIC index contract, at a specified price, during a specified period of time.

Bundling multiple existing securities together to create on of more new securities, wherein:

• at least one of the existing securities is an LIC.

Creating tranches from an existing LIC, wherein:

• shares of one existing LIC are obtained;
• and
• two or more new securities are issued, where the two or more new securities are derived from the existing LICs and one security must exhaust its cash calls before any cash calls are made on the next tranch.

Creating a time series of LICs, wherein:

• separate LIC securities are issued over time by the same issuer, for substantially similar risks, with substantially similar terms.

An exchange which trades LIC securities, wherein:

• LIC securities are listed on an exchange;
• and
• the exchange provides for or enforces collateral, margin, surety, or performance bond requirements.

A Dutch auction process for LIC shares, wherein:

• the lowest bidders obtain shares, until the LIC issue is at least fully subscribed;
• and
• shares are allocated between successful bidders if the issue is oversubscribed.

Spinning off a subsidiary by means of a share dividend to shareholders of the parent, wherein:

• said subsidiary shares are shares in a closed end fund.

Use of portfolio management and portfolio mathematics applied to portfolios of both LICs and LIC underwriters.