in Aerospace

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

Barnbrook marking its 40th anniversary at its 12th Farnborough Airshow

Hampshire-based Barnbrook Systems Ltd has already started preparations for its 12th consecutive appearance at the world famous Farnborough International Airshow next summer (16-22 July), where the award-winning UK firm will mark

Medway named as second new patrol ship

A bottle of Chatham-made Dockyard Gin smashed against the bow of the 2,000-tonne warship, Medway, as it was formally named on Friday morning at BAE's Scotstoun yard on the Clyde by Lady Fallon, wife of Defence Secretary Sir Michael Fallon

Gatwick wins Airport of the Year

This week at separate ceremonies - Gatwick won Airport of the Year at the National Transport Awards, a global environmental award for its world-first waste plant and Digital In-house Team of the Year at the prestigious Digital Impact

Dstl invites suppliers to contribute to advanced materials consultation

A new enduring consultation has been launched inviting suppliers to help shape the future research activity as part of the Materials for Strategic Advantage (MSA) programme.

Chris Allam appointed MBDA UK Managing Director

MBDA is pleased to announce the appointment of Chris Allam to the role of MBDA UK Managing Director and to MBDA's Group Executive Committee.

Heathrow arrivals benefit from AMAN

Aircraft flying from Europe into London Heathrow Airport now benefit from more accurate delay information thanks to the advanced data available from NATS' Arrival Manager system (AMAN).

Aviation Africa SK18418
See us at
FIL18 BT111017220718Advanced Engineering BT1007021117SMI MilSat BT2907101117SMI FAV BT1007161117Aviation Africa BT18418SMI AirMissBT0305251017