KBRA Assigns Preliminary Rating to Gracie Point International Premium Funding 2017-I, Series 2018-A

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary rating to the Series 2018-A, Class I Notes issued by Gracie Point International Premium Funding 2017-I, Series 2018-A.

This transaction is Gracie Point, LLC’s (“Gracie Point”, the “Company” or the “Sponsor”) third securitization. Gracie Point International Premium Funding 2017-I (the “Issuer”) will issue the Series 2018-A Multi Draw Notes (the “Series 2018-A Notes”) in two classes: Class I (“Class I Notes”) and Class II (“Class II Notes”, jointly referred to as the “Notes”). The initial balance of Class I Notes to be offered will be $13,905,000 and additional Class I Notes may be subsequently offered periodically (each, a “Draw”) pursuant to an addendum up to a maximum amount of $100,000,000 if certain condition precedents are met. On the initial closing date, the Issuer will also issue the full amount of $2,500,000 of the Class II Notes, which Gracie Point will retain. No additional Class II Notes will be issued, therefore on additional Draws, the advance rate will increase. The unrated Class II Notes are fully subordinated to the rated Class I Notes.

Proceeds of the Notes will be used to purchase participation interests (“Participations”) in premium finance loans (each, a “Premium Finance Loan”) made by Gracie Point International, Limited (the “Premium Finance Lender”), to British Virgin Islands exempted companies limited by shares (each, an “Eligible Premium Finance Borrower” or “Borrower”) and to make a deposit into the Series 2018-A Reserve Account to support payments on capped administrative expenses and interest and principal payments on the Class I Notes. All Borrowers will be formed to ensure that such Borrowers are bankruptcy remote. Gracie Point is the sole equity owner of the Premium Finance Lender (which in turn is the sole equity owner of the Issuer), and will serve as the administrator of the Premium Finance Loans.

The initial draw of the Notes will be secured by a portfolio of seven Premium Finance Loans to Eligible Premium Finance Borrowers with one life insurance company: The Manufacturers Life Insurance Company (Bermuda Branch). Each Premium Finance Loan will be at least 100% collateralized by a combination of (i) one or more life insurance policies issued by eligible life insurance carriers (each, an “Eligible Life Insurance Company”) having a minimum cash surrender value (“CSV”) and (ii) cash, if needed. Each Eligible Life Insurance Company has minimum ratings guidelines, as described further herein. In addition, each Borrower is required to reserve three months of accrued and unpaid interest on such Premium Finance Loan plus six months of forward interest on such Premium Finance Loan. The initial seven Premium Finance Loans with one Eligible Life Insurance Company have a current aggregate premium finance loan amount of $15,955,377.

The Notes have an expected maturity date (the “Expected Maturity Date”) of September 2, 2019, which is approximately 18 months after the initial issuance date of March 22, 2018 (the “Initial Issuance Date”) and a stated maturity date (the “Stated Maturity Date”) of March 1, 2020, which is approximately 24 months after the Initial Issuance Date. The Initial Issuance Date will be the closing date and subsequent issuance dates can occur throughout the issuance period (the “Issuance Period”) which ends twelve months after the Initial Issuance Date. If principal collections are received by the Issuer during the Issuance Period and such principal collections are applied on any payment date to repay principal on the Class I Notes, then the Issuance Period will end on such payment date or reserved to purchase additional Participations.

KBRA analyzed the transaction using the Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017 and Global Insurer & Insurance Holding Company Rating Methodology published on October 10, 2017.

For complete details on the analysis, please see KBRA’s pre-sale report, Gracie Point International Premium Funding 2017-I, Series 2018-A Pre-Sale Report, which was published today at www.kbra.com.

The preliminary rating is based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of a final rating that differ from the preliminary rating.

     
Notes  

Preliminary Rating

 

Initial
Notes Balance

 

Maximum
Notes Balance

Series 2018-A, Class I Notes   A+ (sf)   $13,905,000   $100,000,000
Series 2018-A, Class II Notes   NR   $2,500,000   $2,500,000
 

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available Gracie Point International Premium Funding 2017-I, Series 2018-A Representations and Warranties Disclosure.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Alan Greenblatt, Director
(646) 731-2496
agreenblatt@kbra.com
or
Lenny Giltman, Managing Director
(646) 731-2378
lgiltman@kbra.com
or
Andrew Edelsberg, Managing Director
(646) 731-2371
aedelsberg@kbra.com
or
Fred De Leon, Director
(646) 731-2352
fdeleon@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Alan Greenblatt, Director
(646) 731-2496
agreenblatt@kbra.com
or
Lenny Giltman, Managing Director
(646) 731-2378
lgiltman@kbra.com
or
Andrew Edelsberg, Managing Director
(646) 731-2371
aedelsberg@kbra.com
or
Fred De Leon, Director
(646) 731-2352
fdeleon@kbra.com