NEW
YORK, May 20, 2024 /PRNewswire/ -- Atlantic
Global Risk LLC ("Atlantic"), a leading specialist insurance
brokerage firm specializing in transactional risk solutions, is
pleased to have placed the first ever tax liability insurance
policy supporting a landmark transaction in the carbon capture and
sequestration ("CCS") sector. This achievement underscores our
commitment to providing innovative insurance products and
supporting the energy transition.
The 10-year policy provides comprehensive
protection against potential losses with a limit of liability of
$785,000,000.
In response to the enactment of the Inflation Reduction Act, our
client, the owner of a large facility in the Midwest, recognized an
opportunity to utilize the financial incentives set out in Section
45Q to achieve environmental objectives and superior economic
performance. Over the 12-year lifespan of the 45Q credit period,
the CCS project will sequester millions of tons of CO2
into a secure underground geological formation via a Class VI
well.
To finance the substantial investment required to develop the
CCS project, our client entered into a tax equity
"partnership-flip" structure covering a portion of the 12-year life
of the Section 45Q tax credits. Additional financing for the
balance of the 12-year credit period is expected to be secured
through further tax equity transactions and/or tax credit
transfers, depending on which financing structures provide optimal
outcomes in the future.
Since the 45Q tax credits underpin the key economics of the
project, the client recognized that the potential loss of all, or
even just a portion of, the credits posed a significant risk given
its indemnification and guarantee obligations. Although the tax
equity investor did not require tax insurance due to the strong
credit rating of our client, our client recognized that a robust
tax insurance policy backed by A-rated insurers provided
substantial value by protecting against loss of the tax
credits.
Atlantic worked closely with nearly all of the tax insurance
underwriters in the North American market to ultimately design and
place the first-ever 45Q tax insurance policy, protecting our
client against possible issues with qualification of the facility
for the credits, transferability of the credits, and Recapture. As
a result of Atlantic's thoughtful, diligent approach and a
collaborative underwriting process with trusted insurance partners,
Atlantic was able to provide its client with a truly market-leading
solution.
The policy, which was placed in February of this year, has a
coverage period of 10 years and an aggregate limit of liability of
$785,000,000, providing comprehensive
protection against potential losses, safeguarding our client's
investment and commitment to sustainability.
The Minneapolis-based energy
practice of Brown & Brown Insurance is the broker for placement
of casualty lines of insurance for the client and was instrumental
in orchestrating a comprehensive insurance package and smooth
placement process.
About Atlantic:
Atlantic Global Risk LLC is one of the preeminent specialist
transactional insurance brokerage firms in the Americas. With a
focus on providing clients with a differentiated, advisory-led
approach to service and innovative products, we are dedicated to
providing tailored solutions to support our clients' diverse and
complex strategic objectives.
About Brown & Brown's Energy Practice:
The Brown & Brown Energy Practice is comprised of the
combined energy industry teams of the former Hays Companies, Inc.
and Beecher Carlson, LLC, both of which were acquired and became
wholly-owned business units of Brown & Brown Insurance. Brown
& Brown Energy represents a robust cross-section of power,
utility, renewables, mining, and diversified energy clients across
the U.S. and at locations globally.
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SOURCE Atlantic Global Risk LLC