Pooling arrangement means sharing loss and risks equally or split evenly any accident costs. As a result pooling arrangements reduce risks (standard deviation) for each participant. In pooling arrangements the average loss is paid by each person. The probability distribution of accident costs facing each person is reduced by pooling arrangements.
What is the legal definition of a pooling agreement?
Pooling Agreement Law and Legal Definition. A pooling agreement is also termed as a voting agreement, shareholder voting agreement, shareholder-control agreement. A pooling agreement is a contractual arrangement by which corporate shareholders agree that their shares will be voted as a unit. Therefore, a voting trust is created between a group ...
What is meant by pooling of risk?
Pooling Arrangements and Diversification of Risk. Pooling arrangement means sharing loss and risks equally or split evenly any accident costs. As a result pooling arrangements reduce risks (standard deviation) for each participant. In pooling arrangements the average loss is paid by each person.
What is ASE pooling agreement?
A pooling agreement is also termed as a voting agreement, shareholder voting agreement, shareholder-control agreement. A pooling agreement is a contractual arrangement by which corporate shareholders agree that their shares will be voted as a unit.
What is a voting rights pooling agreement?
A pooling agreement is a type of contract in which shareholders of a corporation create a voting trust by pooling their voting rights and transferring them to a trustee. This is also called a voting agreement or shareholder-control
What is pooling arrangement in risk management?
pooling arrangement means an arrangement whereby several insurance or reinsurance undertakings agree to share identified insurance risks in defined proportions. The parties insured by the members of the pooling arrangement are not themselves members of the pooling arrangement.
Why do people enter pooling arrangements?
The purpose of pooling is to spread financial risk across the population so that no individual carries the full burden of paying for health care. This is determined by both the overall level of prepaid resources and the structural arrangements (architecture) of pooling.
What is vote pooling agreement?
Vote pooling is a legal way where shareholders can agree to vote the same way. It is important to understand how vote pooling works, and what it entails. Vote pooling is a tactic whereby shareholders can agree ahead of time as to how they will vote for directors.
How does pooling arrangement reduces each participant's risk explain?
In pooling arrangements each person's risk is reduced but each person's expected accident cost is unchanged. The pooling arrangement reduces risks through diversification. In pooling arrangements, the cost has become more predictable. Normally the average loss is much more predictable than each individual's loss.
What are benefits of pooling?
The potential benefits of pooling are clear: Not being exposed as an individual company or plan sponsor to large and infrequent claims such as life insurance claims, Increased rate stability from year to year.
Why do insurance companies create pools?
Insurance pooling is a practice wherein a group of small firms join together to secure better insurance rates and coverage plans by virtue of their increased buying power as a block. This practice is primarily used for securing health and disability insurance coverage.
How does shareholder voting work?
One of your key rights as a shareholder is the right to vote your shares in corporate elections. Shareholder voting rights give you the power to elect directors at annual or special meetings and make your views known to company management and directors on significant issues that may affect the value of your shares.
What is a pooling agreement oil and gas?
Pooling is the combination of all or portions of multiple oil and gas leases to form a unit for the drilling of a single oil and/or gas well. The unit is generally one or a combination of government survey quarter-quarter sections.
How does a voting trust work?
A voting trust is an arrangement whereby the shares in a company of one or more shareholders and the voting rights attached thereto are legally transferred to a trustee, usually for a specified period of time (the "trust period").
What is an example of risk pooling?
As an example, a state's city governments could join together to create a risk pool for worker's compensation insurance. Other examples of governmental bodies or public organizations that might create risk pools are county governments, state agencies and school districts.
What are the three kinds of risk pooling?
There are essentially four classes of approach to risk pooling [7] : 1) no risk pool, 2) unitary risk pool, 3) fragmented risk pools, 4) integrated risk pools, and below are their definitions: 1) no risk pool: When there is no risk pooling, individuals are responsible for meeting their own health care costs as they ...
What is meant by pooling of risks in insurance?
Spread of Risk — the pooling of risks from more than one source. Can be achieved by insuring in the same underwriting period either a large number of homogeneous risks or multiple insured locations or activities with noncorrelated risks.
Under what circumstance will a pooling arrangement result in reduced risk?
A pooling arrangement result in reduced risk (standard deviation) to the participants in the pool only when losses are perfectly positively correlated.
Why does the pooling of risk lead to an overall reduction of risk in society?
The pooling of the risk leads to an overall reduction of risk in society because insurers' accuracy of prediction improves as the number of exposures increases. Insurers pool similar risk exposures together to compute their own risk of missing the prediction.
How does insurance reduce risk?
Insurance reduces risk by transferring it to the company that issues the policy. You pay an insurance premium rather than risk the possibility of a much larger loss. Some decisions regarding insurance have already been made for you, such as: those required by law (e.g. workers' compensation)
What is pooling of losses in insurance?
Pooling of Losses Pooling or the sharing of losses is the heart of insurance. Pooling is the spreading of losses incurred by the few over the entire group, so that in the process, average loss is substituted for actual loss.
What is a pooling agreement?
A pooling agreement is a type of contract in which shareholders of a corporation create a voting trust by pooling their voting rights and transferring them to a trustee. This is also called a voting agreement or shareholder-control agreement since it is used to control the affairs of the corporation.
What Is a Pooling and Servicing Agreement?
Also called a PSA, a pooling and servicing agreement dictates the obligations and rights over a pool of mortgage loans required of parties to the agreement. This controls what can be done with this type of trust and is created when mortgages are bundled into securities and sold to investors.
Who collects monthly loan payments and distributes the proceeds to the investors?
The servicer, who collects monthly loan payments and distributes the proceeds to the investors
Can you assign rights to a pool agreement?
In most cases, pool agreements do not allow parties to transfer or assign their rights.
Who controls the activities of a trust?
These investments are often purchased by trusts in which investors in the trust receive payments. The PSA, in this case, controls the activities of the trust. It typically includes the following individuals: The servicer, who collects monthly loan payments and distributes the proceeds to the investors.
Is voting pooling legal?
With this strategy, a group of shareholders agrees to vote the same way for directors ahead of time, making it more difficult to sway the vote. While vote pooling is generally legal, it may be disallowed by your shareholder agreement. For this reason, it's important to consult an attorney before entering a pooling agreement.
What are pooling arrangements?
Pooling arrangements have been around for many years and are used by ship-owners to optimise the return on their vessels in challenging spot market conditions. Owners have sought to aggregate with others to create pools of ships with similar specifications, age profiles and sector operations to offer a competitive product (i.e. a transport solution) that can provide better availability and positioning (and therefore time and cost benefits) to potential charterers.
Who manages a pool?
A pool will usually be managed by a specially established entity. The manager may be a wholly independent ship manager or an affiliate or subsidiary of a ship-owner. Most commonly the pool manager assumes the commercial management of the pool-entered ships. All of the technical management of a ship remains with its owner. Owners engage with the pool manager through a pool agreement and most usually also enter into time charters with the pool manager for the ships that are entered in the pool.
What incentive does a pooled fleet provide?
The incentive for owners has been both the prospect that the revenues of a ship operated in a pooled fleet will out-perform those of that ship traded as a single unit in the spot market and the possibility that pooling would provide a mitigant against the risk of repetitive periods of off-hire (i.e. under-employment).
Is a pooled ship a time charter?
Notwithstanding that a pooled ship may be subject to a time charter and on average earn revenues which are better than it might earn trading alone (or in a smaller single owner controlled fleet) it is nonetheless operating in the spot market.
Who enters a ship in a pool?
Owners who enter ships in a pool will generally also form part of a supervisory board that has oversight of, and discretion in relation to, such matters as admittance of additional ships from existing pool members, admittance of new pool members and the pool formulae. They will not have control over the pool manager itself (unless it is a purely captive entity) and so their sanction as regards management performance lies with the right to withdraw but they can influence pool performance by controlling admittance criteria, the size of the pool and enforcing the withdrawal of ships or participants that are negatively impacting average earnings.
Can a pool manager withdraw a ship?
As noted, the lessor/mortgagee will not usually become entitled to exercise a participant’s rights under the pool agreement so it will not be able to force a withdrawal of a ship directly with the pool manager nor influence a participant’s discretions in the workings of the pool. These will be matters dealt with in positive and negative covenants in the lease/financing documents.
What Does Pooling Mean?
Pooling is a system in which a large number of people purchase insurance as a group in order to lessen the cost of coverage. Essentially, the members of the pool who are deemed low-risk compensate for the elevated cost of insuring those who are high-risk.
Insuranceopedia Explains Pooling
The easiest way to lessen the cost of insurance payouts was to refuse to insure high-risk applicants. The Affordable Care Act, however, has forbidden this practice for health insurers, compelling them to cover applicants with pre-existing conditions.
Cash pooling – definition
Cash pooling (sometimes also written as cashpooling) is a centralised cash management technique that is used by companies made up of multiple subsidiaries. It helps groups optimise the cash balances of all the legal entities as efficiently as possible.
What is cash pooling?
The principle of cash pooling is to centralise cash flow management with the holding company and to balance the bank accounts of all the subsidiaries.
Benefits of cash pooling
Cash pooling offers several benefits for the group and its entities, for example by: - Ensuring better management of each company’s liquidity requirements and surpluses - Reducing the level of short-term debt - Improving self-financing and reducing reliance on loans - Receiving better bank interest rates due to higher volumes -Ensuring better visibility of each company’s cash flow situation and a - consolidated group overview, allowing financing- and investment-based decisions to be made - Ensuring better liquidity risk management.
Prerequisites for cash pooling
The use of cash pooling is set out by HMRC in its manual “INTM503100 – Intra-group funding: Cash Pooling”. Any company can implement cash pooling, regardless of their organisation, provided that this is permitted under the companies’ statutes.
How is cash pooling carried out?
Cash pooling is managed by the treasurer, the financial director or the chief financial officer of the parent company. It involves regularly transferring the bank account balances of all entities to a single master account.
Physical cash pooling
Pooling cash through the physical transfer of funds involves real cash flows between the master account and the accounts of the subsidiaries. There are several methods of physical cash pooling where the balances of the accounts in question are levelled.
Notional cash pooling
Unlike physical cash pooling, notional cash pooling does not involve the physical transfer of funds. Instead, it involves consolidating the merged statements from all bank accounts (with the same currency and in the same country) of the group companies involved in the cash pooling process. It is also referred to as notional pooling.
What Are Pooling Arrangements?
Why Are Pooling Arrangements used?
- Pooling has seen something of a return to grace over the past months as a response to both very challenging market conditions (both in terms of low freight rates and increased competition), increasing specialisation of tonnage and as an alternative (or as a first response) to corporate consolidations. There is a strong movement towards corporate consolidation in certain sectors …
How Do Pooling Arrangements Work?
- A pool will usually be managed by a specially established entity. The manager may be a wholly independent ship manager or an affiliate or subsidiary of a ship-owner. Most commonly the pool manager assumes the commercial management of the pool-entered ships. All of the technical management of a ship remains with its owner. Owners engage with the pool manager through a …
Key Features of Pooling Arrangements
- A key feature of pools is that there is strong commercial commonality between the pooled vessels. For example, we see dedicated pools for capsize, suezmax, ultramax, handysize vessels and for chemical tanker etc. Assuming a ship has the basic characteristics that fit the profile of the pool, points will be awarded and it is these points that will then determine each ship’s share …
Factors to Consider in Assessment of Pooling Arrangements
- In assessing the quality of a pool and the predictability of each ship’s pool revenues financing parties will want to look at a number of key components: (i) ship type (including age); (ii) eligibility criteria; (iii) the track record of the pool manager; (iv) the names/quality of participating owners and their weight within the overall group; (v) the size of the pool and its position in the market; (v…
Final Note
- One final point for financial lessors and banks to note. Pool agreements will usually limit the ability of a participant to assign its rights but they should not prevent an assignment in favour of a financial lessor/lender of the right to receive the pool revenues allocated to any relevant ship. Rights to revenue arise by reason of both the pool agreement and the time charter and so, to be …