NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes from CBC Insurance Revenue Securitization, LLC, Series 2016-1, a securitization of the commissions associated with bank-owned life insurance (“BOLI”) policies.
The BOLI policies are either universal life or hybrid life insurance, which contains elements of both UL and variable universal life insurance. The BOLI policies are from 35 insurance providers to 149 financial institutions (147 banks and 2 insurance companies). The insurance policies were purchased by financial institutions on employees as a tax efficient investment. The financial institutions are entitled to receive any death benefits or cash value associated with the policies. Per a contractual agreement, commissions are paid on the anniversary date of each policy and are generally equal to a percentage of the policies’ cash value. A policy must be in-force in order for a commission to be paid. The insured does not have to be a current employee of the financial institution as a condition for a policy to be in-force.
The portfolio contains 163,960 BOLI policies on 68,121 individuals, where the weighted average age of the insureds is approximately 62.8. The aggregate cash surrender value (“CSV”) of the portfolio is approximately $34.1 billion as of December 31, 2015. The present value of the commissions is approximately $562.8 million based on a discount rate of 7.70% per annum.
For complete details on the analysis, please see our Pre-Sale Report, CBC Insurance Revenue Securitization, LLC, Series 2016-1, which was published May 18, 2016.
|Class||Rating||Initial Principal Balance|
|Class A Notes||A (sf)||$370,000,000|
|Class B Notes||BBB (sf)||$55,000,000|
General Rating Methodology for Asset-Backed Securities, published July 30, 2012
General Corporate Rating Methodology, published on February 1, 2016
Global Insurer & Insurance Holding Company Rating Methodology, published on April 21, 2016
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).