# US 2002/0042770 A1 · Liquid insurance contracts > Agents: this data is available as JSON from the patentgrep API and MCP server — see https://patentgrep.com/llms.txt - Number: US 2002/0042770 A1 - Document ID: US20020042770A1 - Status: Published application - Kind: A1 - Application number: 09/971,492 - Filed: 2001-10-05 - Published: 2002-04-11 - Earliest claimed: 2000-10-06 - Assignees: LIC Development LLC - Inventors: Oakley E. Van Slyke; Brian L. Whitworth - Web page: https://patentgrep.com/patent/US20020042770A1 ## CPC - G06Q 40/02: Banking, e.g. interest calculation or account maintenance (credit or loans G06Q40/03) - G06Q 40/00: Finance; Insurance; Tax strategies; Processing of corporate or income taxes - G06Q 40/04: Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange - G06Q 40/06: Asset management; Financial planning or analysis - G06Q 40/08: Insurance - G06Q: INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR ## Abstract A liquid insurance contract (LIC) comprises a security which is traded or tradable and which has cash flows to the issuer based upon a liability whose exact value is unknown at the time of issuance. A method for creating and trading these LICs, as well as other financial products derived from LICs, may include any of the following steps: writing at least one LIC; preparing regulatory filings for at least two LICs; issuing the two LICs; preparing regulatory filings for a financial product which includes at least one detachable LIC provision; issuing the financial product; creating at least one underwriter as a closed end fund owned by a parent company; placing ownership of at least a portion of an issue of the financial product in an underwriter owned by a parent company; spinning off the underwriter from the parent company using at least one stock dividend; trading shares of the underwriter; reporting information on trades and positions of the underwriter; and valuing the underwriter using analytic modeling, sensitivity testing, portfolio analysis, and/or investment analysis. ## Claims ### Claim 1 Liquid insurance contracts, comprising: a security which is traded or tradable, wherein said security has cash flows to the issuer based upon a liability whose exact value is unknown at the time of issuance. ### Claim 2 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. ### Claim 3 A process which unbundles surety, underwriting, risk bearing, and administration of insurance policies, said process comprising: issuing one or more insurance policies; choosing one or more service providers for such policies; creating an exchange-traded security which obtains future cash payments in consideration of expenses or payments under the one or more insurance policies, where said security is accepted by underwriters; and providing surety arrangements to make one or more payments agreed to by the underwriters. ### Claim 4 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. ### Claim 5 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. ### Claim 6 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. ### Claim 7 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. ### Claim 8 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. ### Claim 9 Bundling multiple existing securities together to create on of more new securities, wherein: at least one of the existing securities is an LIC. ### Claim 10 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. ### Claim 11 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. ### Claim 12 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. ### Claim 13 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. ### Claim 14 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. ### Claim 15 Use of portfolio management and portfolio mathematics applied to portfolios of both LICs and LIC underwriters.