# US 7,580,872 B2 · 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 7,580,872 B2 - Document ID: US7580872B2 - Status: Granted - Kind: B2 - Application number: 09/971,492 - Filed: 2001-10-05 - Published: 2002-04-11 - Granted: 2009-08-25 - Earliest claimed: 2000-10-06 - Assignees: LIC Development LLC - Inventors: Oakley E. Van Slyke; Brian L. Whitworth - Web page: https://patentgrep.com/patent/US7580872B2 ## 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 A business method for unbundling the sale, administration, risk transfer and suretyship of an insurance policy, comprising the steps of: selling the insurance policy by an insuring company to an insured; contracting with a service provider to service the insurance policy; issuing a security using a computer or computer network by a security issuing company other than the insuring company that obtains future cash payments in consideration for payments under the insurance policy; and providing a surety guarantee by other than the issuing company and the insuring company, for the payment by the issuing company of the cash payments of the security. ### Claim 2 (depends on 1) The business method recited in claim 1 further comprising the step of trading shares of the security issuing company on an exchange. ### Claim 3 (depends on 2) The business method recited in claim 2 wherein the security is a Liquid Insurance Contract. ### Claim 4 (depends on 1) The business method recited in claim 1 wherein the issuing step and the providing step occur without the participation of the insured. ### Claim 5 (depends on 1) The business method recited in claim 1, further comprising trading the security on an exchange. ### Claim 6 (depends on 5) The business method recited in claim 5, wherein the step of trading the security on an exchange further comprises trading the security by qualified underwriters. ### Claim 7 (depends on 1) The business method recited in claim 1, further comprising: creating the insurance policy from a previously existing policy form by deleting an exclusion. ### Claim 8 (depends on 1) The business method recited in claim 1, further comprising: creating the insurance policy from a previously existing policy form by adding coverage. ### Claim 9 (depends on 1) The business method recited in claim 1, further comprising: creating a new policy form. ### Claim 10 (depends on 1) The business method recited in claim 1, wherein providing the surety guarantee comprises issuing a performance bond by a surety company. ### Claim 11 (depends on 1) The business method recited in claim 1, wherein providing the surety guarantee comprises issuing a financial guarantee by a financial guarantee company. ### Claim 12 A business method for unbundling different elements of an insurance policy, comprising the steps of: selling the insurance policy by an insuring company to an insured; engaging a service provider to service the insurance policy; issuing a security using a computer or computer network by a security issuing company other than the insuring company that obtains future payments in consideration for payments under the insurance policy; and providing a surety guarantee by other than the issuing company and the insuring company, for the payment by the issuing company of at least a portion of the future payments of the security. ### Claim 13 (depends on 12) The business method recited in claim 12, wherein providing the surety guarantee comprises issuing a performance bond by a surety company. ### Claim 14 (depends on 12) The business method recited in claim 12, wherein providing the surety guarantee comprises issuing a financial guarantee by a financial guarantee company. ### Claim 15 (depends on 12) The business method recited in claim 12, wherein the security is a LIC. ### Claim 16 (depends on 12) The business method recited in claim 12, wherein the issuing step occurs without the participation of the insured. ### Claim 17 (depends on 12) The business method recited in claim 12, wherein the providing step occurs without the participation of the insured. ### Claim 18 (depends on 12) The business method recited in claim 12, further comprising trading the security on an exchange. ### Claim 19 (depends on 18) The business method recited in claim 18, wherein the step of trading the security on an exchange further comprises trading the security by qualified underwriters. ### Claim 20 (depends on 12) The business method recited in claim 12, wherein the future payments comprise cash. ### Claim 21 (depends on 12) The business method recited in claim 12, further comprising: creating the insurance policy from a previously existing policy form by deleting an exclusion. ### Claim 22 (depends on 12) The business method recited in claim 12, further comprising: creating the insurance policy from a previously existing policy form by adding coverage. ### Claim 23 (depends on 12) The business method recited in claim 12, further comprising: creating a new policy form. ### Claim 24 A business method for unbundling non-financial functions of a risk transfer contract from a financial risk, comprising the steps of: creating the contract to transfer risk from a first party to a second party; contracting with a third party for the non-financial functions of the risk transfer contract; issuing a security using a computer or computer network by a security issuing company other than the second party that secures future payments for the financial risk; and providing a surety guarantee by other than the first party and the second party for the payment by the issuing company of the future payments called for by the risk transfer contract. ### Claim 25 (depends on 24) The business method recited in claim 24, wherein the security is a Liquid Insurance Contract. ### Claim 26 (depends on 24) The business method recited in claim 24, wherein the issuing step occurs without participation of the first party. ### Claim 27 (depends on 24) The business method recited in claim 24, wherein the providing step occurs without the participation of the first party. ### Claim 28 (depends on 24) The business method recited in claim 24, further comprising trading the security on an exchange. ### Claim 29 (depends on 28) The business method recited in claim 28, wherein the step of trading the security on an exchange further comprises trading the security by qualified underwriters. ### Claim 30 (depends on 24) The business method recited in claim 24, wherein the creating the contract to transfer risk from the first party to the second party comprises creating coverage for catastrophic loss. ### Claim 31 (depends on 24) The business method recited in claim 24, wherein: creating the contract to transfer risk from the first party to the second party comprises deleting an exclusion from a previously existing risk transfer contract. ### Claim 32 (depends on 24) The business method recited in claim 24, wherein: creating the contract to transfer risk from the first party to the second party comprises adding coverage to a previously existing risk transfer contract. ### Claim 33 (depends on 24) The business method recited in claim 24, wherein: creating the contract to transfer risk from the first party to the second party comprises drafting a new risk transfer contract. ### Claim 34 (depends on 24) The business method recited in claim 24, wherein the future payments comprise cash. ### Claim 35 (depends on 24) The business method recited in claim 24, wherein providing the surety guarantee comprises issuing a performance bond by a surety company. ### Claim 36 (depends on 24) The business method recited in claim 24, wherein providing the surety guarantee comprises issuing a financial guarantee by a financial guarantee company. ### Claim 37 (depends on 24) The method of claim 24, further comprising the steps of: listing the security on a first exchange; operating the first exchange; operating a second exchange; and permitting as traders on the first exchange underwriters which are listed on the second exchange. ### Claim 38 (depends on 37) The method of claim 37, further comprising: enabling investors to trade on the second exchange. ### Claim 39 (depends on 37) The method of claim 37, further comprising the step of: operating the first exchange as a futures exchange. ### Claim 40 (depends on 37) The method of claim 37, further comprising the step of: operating the first exchange as exempt from regulations that apply to a futures exchange. ### Claim 41 (depends on 37) The method of claim 37, further comprising: operating the second exchange as a stock exchange. ### Claim 42 (depends on 37) The method of claim 37, further comprising: requiring a surety guarantee for each trader on the first exchange. ### Claim 43 (depends on 42) The method of claim 42, wherein requiring the surety guarantee comprises issuing a performance bond by a surety company. ### Claim 44 (depends on 42) The method of claim 42, wherein requiring the surety guarantee comprises issuing a financial guarantee by a financial guarantee company. ### Claim 45 (depends on 42) The method of claim 42, wherein effects of counterparty risk on pricing of the security are negligible. ### Claim 46 (depends on 37) The method of claim 37, wherein the step of permitting as the traders on the first exchange comprises excluding as the traders on the first exchange any entities not listed on the second exchange. ### Claim 47 (depends on 37) The method of claim 37, wherein the step of permitting as the traders on the second exchange comprises permitting only accredited investors. ### Claim 48 (depends on 37) The method of claim 37, wherein the step of permitting as the traders on the second exchange comprises permitting at least one business controlled, directly or indirectly, by a reinsurance company.