XL Aftermath
AFTERMATH OF XL’S FAILURE, BOND PROVIDERS MAY BE ABLE TO HELP
These are unusual times!!! Three months ago the odds on HBOS going bust were very low indeed but not today. What will happen next, it’s anyones guess. For the travel industry the loss of the XL Group will have significant wripple effects. Some will be good and others will be very bad. It is anticipated that company failures will continue to rise on the back of XL’s demise. Despite less than 2 weeks passing, a number of company’s have already failed….Exotic Travel Ltd, Ashgreen Travel Ltd, K & S Holidays Ltd, and Respect Holidays. Coupled with the challenging economic conditions, there are travel companies out there experiencing significant business challenges, both operationally and financiually.
However, where a company is bonded by an insurance company, there is a possibility that the insurance company could provide short term finance to assist the company in getting through these challenging times. Iain Bird of Hollard Risk Partners commented “on numerous occasions over the past few years, where an insurance company is providing the travel bonding to an agent or operator which has an underlying viable business but experiences a short term a cash flow issue due to a particular event, it has been the case that an insurance company has assisted in injecting a loan of some form to ensure the company survives and the bond is not called. If all parties including the CAA co-operate it works very well. The company continues to trade andthe insurance company avoids a loss on the bondâ€.
Iain Bird also stated “it is surprising that when the shareholders of a business run in to cash flow difficulties and the bank are not going to increase their exposure, the owners usually have no where else to go and therefore it is important that companies know that they should speak to their insurance company bond providers and consider all financing optionsâ€.
Iain Bird
Hollard Risk Partners Ltd
Tel. 020 70360306
Note for Editors
Hollard Risk Partners Ltd is an FSA authorised intermediary and provides the travel bond market with travel (CAA / ABTA) bonds from Lombard Insurance Company Ltd.
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