First loss capital

Treasury - risk management - pensions risk - defined benefit pension schemes.

(FLC).

First loss capital is a concept designed for the partial protection of the more risk-averse participants in an investment fund, or other risky undertaking.

The party that invests the first loss capital agrees that it will bear all of the first part any losses - up to a pre-agreed limit - before the other participants must begin to suffer a share of any further losses beyond the pre-agreed limit.

Pensions risk management - alternative solutions

"In between risk transfer to an insurer and running-on, options such as raising first loss capital, captives and superfunds offer new avenues for managing pension risk.

In summary, treasurers should conduct a comprehensive evaluation of all available endgame strategies to determine which is the most suitable, and seek expert advice."

Andreas Vermeiren, director, Cardano - The Treasurer, sponsored feature - Issue 3 of 2024 - page 41.

See also

• Bulk purchase annuity (BPA)
• Buyout
• Captive insurance company
• Closed life consolidator
• Consolidator
• Covenant
• Defined benefit pension scheme
• De-risk
• Insurance
• Pension assets
• Pension buyout
• Pension liabilities
• Pension scheme
• Pensions Regulator (UK)
• Pensions risk
• Risk management
• Superfund
• Treasury