US 6,647,375 B1 · Risk reduction system

Abstract

A method for reducing risk including the steps of holding by a seller a liability having a future value S1 and determining the present value P1 of the liability in accordance with the future value S1. The method also calls for buying the liability by a buyer entity for a value P2 greater than the present value P1, thereby providing a first net gain holding the liability by the buyer entity for a period of time and discharging the liability at the end of the period of time for a value S1 that is less than the future value S2 thereby providing a second net gain. The present value P2 is determined according to the present value P1 and according to a time t years prior to the time at which the value of the liability reaches S1. The present value P2 is determined according to the value S2 and the future value S1 is known at the time of the determining of the present value P1. The first net gain is a net gain for the seller and the second net gain is a net gain for the buyer entity. The liability is recorded as a long term debt by the seller and may be at present value by the buyer entity. The buyer entity can be an insurance company.

Claims14

Dependent claims

A method for reducing risk, comprising the steps of:

(a) holding by a first party seller a recognized first party liability owed to a second party liability lender by the first party seller whereby the first party seller has an obligation to discharge the recognized first party liability, the recognized first party liability having a first future value S1;
(b) determining a first present value P1 of the recognized first party liability in accordance with the first future value S1;
(c) buying the recognized first party liability by a third party insurance company for a second present value P2 greater than the first present value P1, thereby providing a first net gain wherein the recognized first party liability is derecognized to provide a derecognized first party liability and the first party seller retains the obligation to discharge the derecognized first party liability;
(d) holding the derecognized first party liability by the third party insurance company for a period of time;
and
(e) discharging the derecognized first party liability at the end of the period of time for the first future value S1 that is less than a second future value S2 in accordance with the second present value P2.

3 more elements

Dependencies are inferred from the claim text.

Risk reduction system

Life of this patent

Risk reduction system

Life of this patent

Abstract

Claims14