What the ILS Models do differently is that they employ this mathematical concept:

The wealth lent is measured in units of National Average Earnings / Incomes (NAE). The risk to wealth created by the lending contract is a prime consideration for investors and lenders.

The greatest risk comes when a lender over-lends and then varies the level of repayments wildly compared to the rate of change of NAE (borrowers’ earnings). Those earnings change much more slowly than these repayment costs. In theory, that does not prevent borrowers from repaying the wealth lent to them if the repayments contract is designed differently. This is a key feature of all ILS Models.

This means that not only are ILS models user friendly for borrowers, but that ILS models are able to offer investors a more competitive, more reliable, more wealth protecting, range of bonds and savings accounts. This is not to ignore the importance of deposits / current and other kinds of short term access accounts.

Being safer from risk of arrears and repossessions than the competition, ILS lenders are more able to raise funds, at market rates as needed, including in some very interesting new ways (new markets) for institutional investors that currently do not exist. There may be some regulatory issues to look at and renegotiate there.

Hence ILS lenders can compete effectively with traditional lenders at both ends of the business – safer and potentially larger loans in inflationary conditions as well as in deflationary conditions in some cases, whilst simultaneously being more able to offer savings contracts that are attractive and capable of resolving any short term cash flow problems. The ILS System operates at market rates and can also operate better than others at more competitive rates in both lending and savings markets.

This gives ILS lenders a significant edge over the competition.

More knowledge of the investment, mutual funds, and pension markets in the Philippines would enable the writer to better appraise the opportunities to create new markets for savings and lending in these potentially related markets, with potentially significant benefits to both of those industries. For example, better protected wealth and reduced volatility for managed funds of every kind can be very attractive to the older and wealthier generation.

## 1 A standard ILS home purchase / home loan plan which will not jump the payments around from year to year even if the interest rate is variable or semi variable. The latter interest rate structure can be very attractive to both lenders and borrowers. It is probably the cheapest way to raise funds and to lend. The drawback is the marketability of a contract in which the level of debt can be seen to be rising in money terms (but falling in value) in conditions of high inflation. In other conditions it is very attractive.

Among the easily marketable variants of this exact same ILS Model are:

##2 A zero deposit home loan based upon a combined rental and purchase contract which starts as rental and converts to mortgage, and maybe, goes back again from purchase to rental at the discretion of the lender should a borrower (later) prefer to rent due to a tight budget or for some other reason – access to capital, or greater mobility, for example. Terms and conditions apply.

##3 A hybrid ILS Model in which an option for a borrower (or a lender) to convert loans from the current Level Payments (annuity) model (easy to market at outset due to familiarity), to an ILS Model. If exercised, this option will then minimise arrears rates after interest rates have risen. This is a very attractive App / option to plug in. The ILS repayments are better managed and not subject to the same affordability problem. Terms and conditions apply.

##4 It is possible to combine a home purchase / rental plan, a savings plan, a pension contributions plan and a life insurance plan under a single monthly subscription. There are business opportunities there.

When pills were first invented the pill company became famous as a brand.

The Hoover Brand also benefited from being a world first.

A breakthrough financial fairness and well-being product 
or series of products like this ILS range can do the same for a lending pioneer.

1.    The way savings interest is taxed. Tax-exempt funds have no problems. Savings interest and capital gains that simply preserve wealth should be exempted from tax. This should be negotiated. There are ways to do that which benefit the treasury.

2. Regulations normally insist on repayments covering all of the nominal interest. There is scope to introduce an index-linked variant if that escapes tax on wealth (nominal gains up to the level of NAE growth). This might appeal tp regulators.

3. Reserve ratios – this is an interesting topic worthy of discussion with regulators. The ILS models may get a much lower capital cost regulation, which may need to be negotiated. A senior member of a Central Bank mentioned this to Mr Ingram, who was already aware.

4. IMF and World Bank pressures may need to be negotiated. The writer is not clear on this point. If so, we should suggest a trial to demonstrate the vulnerabilities created by their imposed regulations and how these block enterprise in the sector of all savings and loans.

Explain how these restrictions get in the way of raising interest rates to create more balanced economies and an escape from the low interest rate trap that the USA and others are currently in. A similar index-link to AEG can provide exceptional options for governments and business loans at the same time as addressing the low interest rate trap and deflationary issues. Edward Ingram is preparing to publish a paper covering these and other issues. The ideas are highly regarded by his peers in central banks, academics, macro-economists, and financial practitioners. The ILS solution is a part of the paper.

EDWARD INGRAM is a once famous financial adviser, employer, practitioner, and innovator with expertise in mathematics and engineering and fund management. He is current with the latest ideas in macro-economics and financial stability. In fact he is a leader in that field. He is passionate about financial fairness and well-being which can come out of having financial stability or vice versa. He has worked in financial development and implementation with more than one financial institution and introduced a developing nation[1] to unit trusts whilst launching its leading brand.

He has already introduced a number of very successful innovations to the world of finance and investment.[2] Simplicity of concept is key.

The above ideas combine the latest in macro-economic financial stability theory, marketing, and simplicity of concept. The mathematical study relating to this is unquestionably a world leader.

Many (maybe all) of his earlier and wide-ranging series of published innovations in mortgage finance, published in 1974/5 in the UK’s Building Societies Gazette have been adopted.

More in his real dropbox.

He has numerous websites, online videos, and testimonials should they be of interest. He is a columnist for South Africa’s leading online financial magazine, where he writes about macro-economic frameworks and their impact upon the world’s institutional and financial stability. Search for 'Edward Ingram.' Or use this link.

[1] Zimbabwe – the Kingdom Brand.
[2] Broker Bonds in the UK became a £2 billion industry as a new portfolio management model
Platforms are modeled on Edward’s Niche, (National Investment Clearing House) idea that made headlines at the time. It is intended to prevent fraud between advisers and clients.
Turkey implemented the basic form of ILS house purchase plans in the 1990s to cope with inflationary conditions. It is limited to civil servants for a reason and is not fully refined. Link to a paper.

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