Beleaguered completion bonder Film Finances Inc. said things are looking up for the company, if not for the insurance business as a whole.
Speaking to the Century City Chamber of Commerce, Steven Ransohoff, Film Finances senior veepee for legal and business affairs, said his company recently signed a new reinsurance agreement with Lloyd’s of London and a group of other insurers and bonded “Lightning Jack,” the new Paul Hogan starrer that is budgeted at $ 24 million and set to go before the cameras Aug. 7.
Industry sources say the bonder has struggled over the past year as a direct result of problems at Lloyd’s, its longtime reinsurer.
In the wake of massive losses worldwide, sources said Lloyd’s would not grant reinsurance for films with budgets in excess of $ 20 million (that number is now under review). The instability at Lloyd’s led some entertainment lenders to no longer lend against Film Finances guarantees.
Getting its act together
Ransohoff said prices for its bonds — which had dropped to less than 1% of budgets due to cut-throat pricing — would rise to about 3% (reflecting the increase in reinsurance rates) and underwritings would become much stricter.
Even so, the fact that Film Finances appears to be getting its house in order is a relief to the independent production community, which relies on the bonds to get their films financed.
In early June, insurance giant Transamerica shuttered Bette Smith’s Completion Bond Co., once one of the industry’s most active bonders.
Picking up slack
That left only Film Finances and Intl. FilmGuarantors (which is backed by Fireman’s Fund) to pick up the slack.
But Film Finances still has one more hurdle to clear before it’s really back on solid ground.
HBO has a $ 20 million suit pending against Film Finances that is set to go to trial in Los Angeles federal court Aug. 24 if its motion for summary judgment is not granted.
HBO looks for $ 14 mil
HBO is trying to recoup $ 14 million (interest and lawyers fees have pushed the figure to about $ 20 million) it advanced for two Aaron Russo films –“Off and Running” and “Paradise Paved”– which it claims weren’t delivered on time.
Reinsurer Lloyd’s has posted a $ 12.5 million bond according to a prejudgment attachment made by the court last September.
But if HBO is successful, the difference (about $ 8 million) looks like it will have to come out of Film Finances’ pocket. Ransohoff would not comment on the pending litigation.
The industry consensus is that Film Finances would have a very difficult time singlehandedly covering that amount.