Method, system, device, and media for managing debt support

Abstract

A computer-implemented method, system, apparatus, and media is directed to minimizing a risk associated with an anticipated value of an investment. An insurer establishes a capital structure within a computer memory of a computer system, the capital structure designed to minimize risk and being pledged to fund a default associated with the investment. Establishing the capital structure can include allocating regulatory capital based on a coverage factor multiplied by an average annual depression scenario default percentage for the investment and determining a portion of the capital structure for a pledged insuring investment that produces at least a portion of the cash stream. A determination of whether the established capital structure is sufficient to obtain a minimal target credit rating for the insurer is generated. The desired target rating is electronically provided based on the determination.

What is claimed is: 
     
         1 . A computer-implemented method for minimizing a financial risk associated with an anticipated value of an investment, which comprises:
 establishing by a computer system of an insurer a capital structure within a computer memory, the capital structure created and designed to minimize the risk of a default of payments required to be made by the investment;   requiring that the capital structure be funded with capital to fund the payments that are required to be made by the investment in the event of a default on payments by the investment; and   displaying on an interactive user interface associated with the computer system an electronically forwarded simulation of the capital structure including an insuring scenario based on the required funding of the capital structure in the event of a default on payments by the investment, and   changing the insuring scenario by providing in the use interface changed inputs; wherein the displayed simulations of capital structure improves the functioning and performance of the computer system by providing different simulations resident for immediate use and evaluation for determining a preferred capital structure for the investment;   wherein, when establishing the capital structure, the computer system:
 determines whether the established capital structure is sufficient to cover a depression scenario period to obtain a minimal target credit rating for the insurer, 
 allocates a first credit having a first obligation to make specified payments and allocates a second credit having a second obligation to make specified payments, each of the first credit and second credit being in a non-default state when a respective obligation is met and being in a default state when a respective obligation is not met; 
 associates a first senior holder and a first subordinate holder with the first credit using (a) a respective first senior holder financial instrument through which certain payments from the first credit flow to the first senior holder and (b) a respective first subordinate holder financial instrument through which certain other payments from the first credit flow to the first subordinate holder, and 
 wherein, upon a default, the computer system directs the certain payments from the first credit to the first senior holder and directs the certain other payments from the first credit to the first subordinate holder; and 
   wherein the display provides various simulations to be evaluated in real time so that the most effective capital structure can be determined and selected for the investment to minimize risk.   
     
     
         2 . The method of  claim 1 , wherein the investment comprises at least one of a debt, a bond or a loan, and wherein the establishing of the capital structure comprises:
 allocating the regulatory capital in the computer memory to an amount equal to at least a coverage factor multiplied by an average annual depression scenario default percentage for the investment;   selecting by the computer system an investment criteria to invest the regulatory capital to create an investment return; and   determining by the computer system a portion of the capital structure for a pledged insuring investment.   
     
     
         3 . The method of  claim 1 , which further comprises: associating, with the computer
 system, a second senior holder and a second subordinate holder with the second credit using (a) a respective second senior holder financial instrument through which payments from the second credit flow to the second senior holder and (b) a respective second subordinate holder financial instrument through which payments from the second credit flow to the second subordinate holder; and   structuring the first senior holder financial instrument and the first subordinate holder financial instrument in the computer memory to give priority to payments due the first senior holder prior to payments due the first subordinate holder in the event the first credit enters the default state; and electronically receiving the target rating based on the generated determination.   
     
     
         4 . The method of  claim 1  which further comprises:
 the interactive user interface receiving an input that sets a capital pre-funding in the capital structure; 
 determining by the computer system an amount of the capital pre-funding by the insurer that is sufficient to cover the depression scenario period and that is calculated by a function of at least a pre-funding coverage factor and a downgrade function that is applied to an average annual depression scenario default percentage; and 
 changing the insuring scenario based on the determined credit rating. 
 
     
     
         5 . The method of  claim 4 , wherein the simulating further comprises determining aggregate capital charges for the capital structure to be at least 1.25 times to 2.3 times an amount sufficient to cover a default. 
     
     
         6 . A non-transitory processor readable medium for carrying out the method of  claim 1  for minimizing a financial risk associated with an anticipated value of an investment, comprising processor readable instructions that when executed by a processor causes the processor to perform the recited steps of the method. 
     
     
         7 . A computer-implemented system for carrying out the method of  claim 1  and minimizing a financial risk associated with an anticipated value of an investment, comprising:
 a company computer implemented component for establishing capital structure, determining whether the established capital structure is sufficient to cover the depression scenario period and electronically receiving the target rating based on the results of the determining step. 
 
     
     
         8 . The method of  claim 7 , wherein the simulating includes determining aggregate capital charges for the capital structure to be at least 1.25 times to 2.3 times an amount sufficient to cover a default. 
     
     
         9 . A computer-implemented method for minimizing a financial risk associated with an anticipated value of an investment, which comprises:
 establishing by a computer system of an insurer a capital structure within a computer memory, the capital structure created and designed to minimize the risk of a default of payments required to be made by the investment;   requiring that the capital structure be funded with capital to fund the payments that are required to be made by the investment in the event of a default on payments by the investment; and   displaying on an interactive user interface associated with the computer system an electronically forwarded simulation of the capital structure including an insuring scenario based on the required funding of the capital structure in the event of a default on payments by the investment, and   changing the insuring scenario by providing in the use interface changed inputs; wherein the displayed simulations of capital structure improves the functioning and performance of the computer system by providing different simulations resident for immediate use and evaluation for determining a preferred capital structure for the investment;   wherein, when establishing the capital structure, the computer system:
 determines whether the established capital structure is sufficient to cover a depression scenario period to obtain a minimal target credit rating for the insurer; 
 allocates a first credit having a first obligation to make specified payments and allocates a second credit having a second obligation to make specified payments, each of the first credit and second credit being in a non-default state when a respective obligation is met and being in a default state when a respective obligation is not met; 
 associates a first senior holder and a first subordinate holder with the first credit using (a) a respective first senior holder financial instrument through which certain payments from the first credit flow to the first senior holder and (b) a respective first subordinate holder financial instrument through which certain other payments from the first credit flow to the first subordinate holder; 
 associates a second senior holder and a second subordinate holder with the second credit using (a) a respective second senior holder financial instrument through which certain payments from the second credit flow to the second senior holder and (b) a respective second subordinate holder financial instrument through which certain other payments from the second credit flow to the second subordinate holder, and 
 structures the first senior holder financial instrument and the first subordinate holder financial instrument in the computer memory to give priority to payments due the first senior holder prior to payments due the first subordinate holder in the event the first credit enters the default state; 
   wherein, upon a default, the computer system:
 directs the certain payments from the first credit to the first senior holder and directing the certain other payments from the first credit to the first subordinate holder, and 
 directs the certain payments from the second credit to the second senior holder and directing the certain other payments from the second credit to the second subordinate holder, and 
   wherein the display provides various simulations to be evaluated in real time so that the most effective capital structure can be determined and selected for the investment to minimize risk.   
     
     
         10 . The method of  claim 9 , wherein the capital structure is established by allocating the regulatory capital in the computer memory to an amount equal to at least a coverage factor multiplied by at least 1.25 times to 2.3 times an amount sufficient to cover a depression scenario default percentage for the investment, selecting by the computer system an investment criteria to invest the regulatory capital to create an investment return. 
     
     
         11 . The method of  claim 10 , wherein the investment comprises at least one of a debt, a bond or a loan, and the method includes electronically receiving the target rating based on the generated determination. 
     
     
         12 . A non-transitory processor readable medium for carrying out the method of  claim 10  for minimizing a financial risk associated with an anticipated value of an investment, comprising processor readable instructions that when executed by a processor causes the processor to perform the recited steps of the method. 
     
     
         13 . A computer-implemented system for carrying out the method of  claim 10  and minimizing a financial risk associated with an anticipated value of an investment, comprising: a company computer implemented component for establishing capital structure, determining whether the established capital structure is sufficient to cover the depression scenario period; displaying on a user interface the simulations of the capital structure; and electronically receiving the target rating based on the results of the determining step.