NOVEMBER 21, 2019 10:06 AM (EST)
AM Best Revises Outlook to Positive for Issue Credit Rating of Class B Notes of 321 Henderson Receivables V LLC
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 21, 2019 10:06 AM (EST)
The issuer was formed for the purpose of acquiring receivables from an affiliate; conducting activities required for the maintenance and servicing of the receivables; creating trust and/or other entities for the purpose of securitizing the receivables; issuing securities related to the securitization; and organizing other activities incidental to the performance of the aforementioned items.
Proceeds from the issuance of the notes, along with contributed equity capital, were used to purchase a pool of structured settlement and annuity receivables (receivables) from the affiliate and to fund the initial reserve requirement. The initial pool of receivables consisted of 1,844 contracts totaling $189,169,244.16 in payment obligations from 107 insurance companies. Nearly all of the receivables were pursuant to a court order. A structured settlement describes an arrangement between a claimant and a defendant, which results in compensation to the claimant who has settled a claim, primarily arising from a personal injury lawsuit with the
defendant. The compensation arrangement provides for a payment to be received by the claimant over time, usually in the form of an annuity payment issued by an insurance company. A settlement receivable represents the purchase of all or a portion of a claimant’s right to receive scheduled settlement payments, thereby providing liquidity to the claimant whose structured settlement no longer meets his/her particular life circumstance.
The outlook of Class B Notes reflects the improvement of its credit enhancement. The overall rating actions reflect qualitative and quantitative considerations, including default probabilities that are derived from stochastic modeling that incorporates the default probability of the annuity providers maintaining the payment obligations and the assumed recovery rate on the cash flows in the event of an insurance carrier default. The modeling of the transaction incorporates updates on: (1) Long-Term Issuer Credit Ratings (Long-Term ICRs) of the insurance carriers; (2) financial data required for modeling purposes; and (3) remaining collateral information, including the reduced payment obligations of Guaranty Association Benefits Company, a not-for-profit captive insurance company formed for making payments to the payees and certificate holders of the liquidated Executive Life Insurance Company of New York.
The ratings could be upgraded or downgraded or the outlook revised if material changes occur in the Long-Term ICRs of the remaining insurance carriers, a reduction in the remaining scheduled payments occurs or there is an increase in the level of the write-off activity or a breach in ongoing surveillance or compliance benchmarks.
These are structured finance ratings.
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AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.