Aon proposes way to insure troubled assets

Insuring troubled assets through the creation of an ‘asset stabilization pool’ would help to strengthen America’s economy, Aon told the House Committee on Financial Services in Washington.
The plan involves the sharing of risk by participants in an entity referred to as the “asset stabilization pool,” according to D. Cameron Findlay, executive vice president and general counsel of Aon Corporation.
Participants in the pool would have a portion of the principal and interest from specific illiquid assets guaranteed, he continued.
The program would insulate an asset holder from a decline in value resulting from non-payment or expected non-payment of principal and interest.
Asset holders would be required to retain a small percentage of the shortfall of principle and interest, subject to a maximum annual payout per asset, Aon said in a release.
Asset holders would be reimbursed from the pool for a shortfall in principal or interest once such amounts exceed their retention on a single year, the release added.
Aon submitted the plan as part of a response to an October 2008 request for comments from the Treasury Department.