in Aviation

Edge launch aircraft RVI

Posted 10 March 2017 · Add Comment

Lloyd's Broker, Edge Group, have launched a facility for Residual Value Insurance (RVI) on commercial aircraft.



Peter Spencer, Edge Group’s Director of Structured Risks said: “We have spent a great deal of time developing a Residual Value product for commercial shipping and are now extending this to commercial aircraft.”

Residual Value Insurance (RVI) Indemnifies a bank or lessor against a loss that might occur if the sale proceeds an aircraft are less than the insured residual value at one point in time. This is normally on maturity of a lease or when a balloon payment is due in non-recourse debt financing. The cause of loss would be the unexpected decline in value the aircraft due to changes in market conditions. This enables a bank or leasing company to insure their downside at the end of a lease whilst keeping all the upside.

RVI has been notoriously difficult to arrange, but Edge Group’s London office has been at the forefront of the development of the product, cutting their teeth on difficult assets such as commercial vessels.

Peter Spencer said: “Of course RVI insurers would prefer to offer RVI on aircraft which are ‘newer technology’ narrow body commercial aircraft and the most competitive terms can be negotiated on these.  However, as we are working with a number of different insurers with different risk appetite, it is possible to find insurers prepared to offer terms on many types of aircraft provided these are not older than 14 years at maturity of the RVI. These include narrow body Boeing and Airbus, wide bodied aircraft, Freighters, Regional Jets, Corporate Jets, Turbo Props, Helicopters and certain aircraft Engines”

Edge Group have arranged underwriting capacity in excess of $50,000,000 per aircraft with insurers with ratings of between Standard & Poor’s ‘A’ to ‘AA’. Peter Spencer said “it is very important to arrange RVI with security which is undoubted. The policies we arrange are for periods ranging from 3 years to 12 years, so it is imperative for us to know the insurance company will be there to pay a claim when the time comes. Documentation is important too. Each policy is tailored to the specific transaction with lawyers acting on each side to ensure the documentation is watertight. As the policies can be for as long as 12 years and many things can happen over this time with changes in personnel, so claims are made direct to the insurance company’s claims department”.

Peter Spencer said: ”This is an exciting period for us. We are starting to see a flow of viable deals from all over the world and we are starting to put them away.”

* required field

Post a comment

Other Stories
Advertisement
Latest News

AOA stresses need for new EU air traffic rights agreements

The Airport Operators Association (AOA) has stressed that the importance of aviation as the main mode of transport for people travelling between the UK and the EU means that it is imperative that new agreements on air traffic rights are

Locken launching Mechatronic range

Provider of cable-free access control solutions, Locken, will - following its recent joint venture with ISEO Group - launch a new range of highly interactive security systems called Mechatronic.

SatelLife competition winners announced

Nine young space entrepreneurs have won a share of £50K for innovative ideas on how to use satellite data to improve life on Earth.

Richard Peckham elected as Chair of UKspace

Richard Peckham, UK Strategy & Business Development Director Airbus Defence and Space Ltd, has assumed the role of Chair UKspace following the recent departure of Patrick Wood from Surrey Satellite Technology Ltd (SSTL).

Qatar-UK Business and Investment Forum addresses aviation links

Qatar Airways played a key role in the Qatar-UK Business and Investment Forum taking place in both London and Birmingham this week under the patronage of Qatar's Prime Minister and Minister of Interior, His Excellency Sheikh Abdullah

Zaun accredits installers to roll out ArmaWeave

High security perimeter systems manufacturer Zaun Limited is bolstering the ranks of approved installers for its unique super-intruder-resistant fencing.Zaun accredits installers to roll out ArmaWeave

SMIFAV SK2003010517
See us at
DSEI LB0911150917SMI MSS BT0601270417Future Armoured Vehicles Situational Awareness BTSMI12DE BT203280917SMI BT1705SMI FHT BT0601190517SEKO