... it began with a "lock box"

Terry H Jones, John T Oakes and Douglas L King designed a new form of personal storage concept. It ultimately took the form of a 40′ Intermodal Cargo Container, sectioned into 8 – 5’x8′ compartments for placement on apartment complexes, shopping centers convenience stores, unimproved land and the list goes on. The potential for this specialised type of mini-storage container, referred to routinely as a “Lock Box” or “module”, was vast. 

After several rounds of prototyping, the Principals created a new design, with side roll-up doors in multiple configurations. Hyundai and Hyosung in South Korea agreed to construct prototypes and soon they were landing in Savannah, Georgia and the Port of Los Angeles. Next was transportation, which was solved through Ryder International, with shipping to 26 cities in the US. 

With manufacturing, transportation and distribution solved, the issue, as is often the case in entrepreneurial ventures, was fundng! 

In the early 80s, a real estate mogul, an IT genius and an insurance guy had an idea!  … to create mobile “mini-storage”

After several attempts at conventional venture funding, it became obvious to use “leveraged leasing” as was the norm for financing international rolling stock. The modules had the benefit of 10% investment tax credit and five year depreciation, which significantly reduced periodic lease payments. ITT Leasing saw the value of this idea and issued a USD$20 million lease commitment for the first 1,000 “lock boxes”. 
     
… at this point you may be asking “how does this relate to “Investors Guaranty Fund, Ltd.” ? 

The Principals needed a guarantor for the leveraged lease. They also needed additional working capital for the project. D. Patrick McCoy arranged a small group of investors which raised the US$100,000 that ultimately launched IGF. The Principals then engaged American Appraisal Associates, at the time one of the largest valuation companies in the U.S., to confirm the value of each “module” in place for its intended use. 

Recognising there was a significant gain on manufacturing and that the projected net rental revenues were substantial, the Principals set about to find a bank letter of credit or surety from an insurance company, to satisfy a backstop for the leveraged lease. 

“Systemic impediments” – Regardless that from their own resources and transaction cashflows, there was sufficient funds to fully backstop the 15 years of leveraged lease payments, no bank or insurance company was able to provide the needed guaranty. Risk-based capital charges for banks, and premium and collateral limitations on insurance companies precluded issuance of such guarantee. 

Then an idea … why not form a financial guaranty insurance company? Enter the Hartford! They were open to the idea of writing the primary surety coverage which would create the needed credit support for the leveraged lease. The new financial guaranty insurance company would reinsure them with “fully hypothecated” reinsurance … the beginnings of a structure.

Necessity, the mother of invention appeared…   Investors Guaranty Fund, Ltd. was created as the financial guaranty component of an integrated multi-entity modular manufacturing, transportation, distribution, financing and service platform, an early prototype of the Alliance iii.o XIRD digital utility component architecture.