Axis and Fidelis provide reinsurance for Piiq insurance-backed aircraft refinancing

Axis Insurance and Fidelis Insurance have provided reinsurance to support Piiq Risk Partners' first insurance-backed aviation finance transaction.

Piiq, a global aerospace re/insurance broker, completed the deal within its integrated finance linked insurance (IFLI) division, which designs, originates, structures and manages aircraft finance transactions using commercial insurance, alongside Credit Agricole Corporate and Investment Bank (CACIB).

The deal, which closed on March 30, 2021, enables Japanese financial institutions to access IFLI through Japanese insurers, and customers to simultaneously access the Japanese equity market and the credit insurance markets. It is believed to be the first time that an insurance-backed product of this nature has supported the refinancing of an aircraft already in operation.

The insurers were SOMPO Japan Insurance and Aioi Nissay Dowa Insurance. CACIB acted as overall JOLCO equity and debt arranger.

The transaction was also a market first refinancing of a Japanese operating lease with a call option (JOLCO). It refinanced a 2020 vintage Airbus A350-900 aircraft that is operated by Scandinavian Airlines System (SAS).

The IFLI product offers banks and capital market investors the protection of an insurance-backed aviation finance product when financing new aircraft or refinancing aircraft already owned by airlines or lessors. Piiq provides a full service offering with-in house underwriting, deal origination, legal due diligence and transaction structuring and analytics.

Mark Esdaile, senior partner and head of IFLI underwriting at Piiq, said: “IFLI was conceived as a way of expanding the insurance market capacity through structures, diversity of aircraft types, aircraft vintage and manufacturers. In closing this transaction, we have proven that by having a close partnership with insurers and in structuring a transaction well, a deal can be done even in this period of uncertainty.”

Kostya Zolotusky, Piiq’s managing partner of IFLI, said the novelty and complexity of its first deal of this type demonstrates its flexibility and broad applicability in the market. “Our full service offering to insurers and market-leading modelling capability means we are able to look at aircraft vintages and structures that open up additional opportunities for the market. With a good level of interest from airlines, lessors, banks and insurers, we are very excited for the future,” he said.

José Abramovici, global head of asset finance group at CA-CIB, said: “SAS, Japanese equities, IFLI, the insurers and CACIB cooperated extensively to cross the finish line and close this landmark transaction.”