A Lloyd’s broker has announced the availability of its residual value insurance (RVI) facility for commercial aircraft across the globe.
Edge Group director of structured risks Peter Spencer said that the company “spent a great deal of time” developing the product for commercial shipping, and is now extending its availability to commercial aircraft.
Through RVI, the bank or lessor is indemnified against a loss if the sale proceeds of an aircraft are less than the insured residual value at any given point in time, which is normally pegged upon maturity of lease or the due date of a balloon payment.
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The company explained in a statement that losses may occur due to an unexpected decline in aircraft value due to changes in market conditions.
“RVI has been notoriously difficult to arrange,” Edge noted, adding that the company has cut its teeth in providing the product through its work with commercial seafaring vessels.
Furthermore, the firm said it has arranged an underwriting capacity of $50 million per aircraft with ‘A’ and “AA” insurers as rated by Standard & Poor’s. The policies cover periods ranging from three to 12 years.
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