To minimal fanfare, the second-ever bank-owned life insurance (BOLI) broker-commission backed ABS recently closed. Called A&K Funding series 2004-1, the deal totaled $60 million and was led by sole underwriter Credit Suisse First Boston, closing in the first quarter as a negotiated private placement.
The $60 million offering, with a 30-year legal final maturity, priced with a 7.87% coupon.
A&K Funding, a vehicle of Analect Administrative Services, is the seller/servicer of the transaction. The receivables are administration rights Analect charges insurance policy originator Sun Life Assurance Company of Canada. The U.S.-originated BOLI policies are for various financial management employees, described as directors, executives and management by Moody's Investors Service, which rated the transaction A3.' Moody's rates Sun Life Aa3.'
With its first securitization under its belt, A&K hopes to become a programmatic ABS issuer, possibly tapping the market yearly.
The assets include 8,406 individual BOLI policies, totaling roughly $18.5 billion in death benefits. The primary risks associated with a BOLI securitization are drastic changes in earnings projections for policy surrender value, mortality rates during the transaction's life and the likelihood that policies be surrendered or exchanged, Moody's says in a report on the deal.
In a notable twist, A&K beat rival Clark Consulting's CBC Insurance vehicle, which had planned a $50 million transaction via Banc One Capital Market's Dallas investment banking branch. That deal lingered in the pipeline for months, and failed to price.
Analect, one of the largest BOLI administrators and servicers in the U.S., was founded in 1999 and is based in Great Neck, N.Y.
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