Jun 21, 2017
Europe’s first securitisation of insurance premium loans provides a template for unprecedented levels of originator freedom in the region. The £300 million ($379.8 million) deal allows Premium Credit to diversify its funding sources, giving it the flexibility to tap the public market when conditions are right, while maintaining an existing bank facility. Jeremiah Wagner, who led Cadwalader's representation of Premium Credit Limited, discusses the innovative transaction with IFLR.
An excerpt from "Europe’s First Insurance Premium Loan Securitisation," IFLR, June 21, 2017:
The issuer’s loss rates are historically low as the underlying loan is technically dual recourse – if the consumer defaults, Premium Credit can go directly to the insurance company to be repaid. "But risk does exist – the issuer is still reliant on insurance companies, for example," said Jeremiah Wagner, partner at Cadwalader Wickersham & Taft, who advised the issuer.
This [adjustable concentration limits] feature could be used by any issuer affected by eventdriven change – small and medium enterprise (SME) loans, for example, added Wagner.
"This deal is testament to the idea that investors are not afraid of complexity as long as that complexity is serving a purpose," said Wagner. "When we talk about esoteric assets, this is definitely one, but investors in Europe have been dying for diversification."
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Jeffrey Rotblat will discuss "Accumulation/Aggregation/Alternative Exit Strategies" at this event.