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Aircraft Finance Insurance Consortium (AFIC)

Developed in cooperation with Boeing, Marsh’s Aircraft Finance Insurance Consortium (AFIC) offers aircraft finance non-payment insurance to support loans to airlines and leasing companies for purchases of new and nearly new aircraft.
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Responsive

Responds to payment default, with insurers paying 100% of the missed instalment.

Adaptable

Commercially flexible and can be combined with numerous financing structures.

Innovative

Groundbreaking collaboration between Marsh and highly rated insurers to offer the first comprehensive non-payment insurance for aircraft financing.

Overview

The AFIC platform enables airlines and leasing companies to access insurance-supported aircraft financing for the purchase of Boeing and Embraer commercial aircraft. AFIC is supported by a panel of highly rated global insurance companies, which underwrite the aircraft finance non-payment insurance policies.

AFIC’s aircraft finance non-payment insurance fully protects participating banks or institutional investors from payment default under an AFIC-supported aircraft financing. In the event of a failure to pay by the airline or leasing company, the lender submits a proof of loss and the AFIC insurers pay 100% of the missed instalment. Insurers continue to make all scheduled payments to the lender until all outstanding principal and interest is repaid.

Marsh’s experienced AFIC team has executed transactions supporting over US$6 billion in AFIC-supported aircraft financings of more than 100 aircraft for a variety of aircraft types, jurisdictions, and structures since launch in 2017.

The global AFIC team is comprised of experienced specialists in aviation finance and insurance, who together support all aspects of your transactions — from origination through repayment, or where applicable, policy response.

Key benefits to airlines and leasing companies:

  • The policy can provide access to more capital from existing lenders and to capital from additional funding sources. Since AFIC’s launch, over 30 lenders and arrangers have provided AFIC-supported funding. Additional lenders have bid to fund transactions and we are continually speaking with new lenders about onboarding AFIC.
  • The policy can result in more efficient funding as it mitigates lenders’ risk.
  • The policy can be used to support a variety of transaction profiles and can be combined with different transaction structures, such as finance leases, operating leases, optimised leases, Japanese Operating Leases with Call Options (JOLCO), and Japanese Operating Leases (JOL).

Key benefits for lenders:

  • Insurance premium is typically financed as part of the loan and repaid by the airline or leasing company.
  • The policy provides capital relief under the Basel framework as implemented in Europe and the US. Legal opinion letters are immediately available from outside counsel on a non-reliance basis.
  • No risk of policy cancellation or withheld claim payment due to obligor misrepresentation.
  • No lender warranties or conditions precedent to insurers’ obligations under the policy.
  • Insurers cannot cancel the policy for any reason.
  • In the case of an insurer’s default, the lender can step into the rights of that insurer under the operative documents.

100+

AFIC supported aircraft.

6+

billion US$ in aircraft financing transactions.

1st

of its kind commercial insurance alternative to export credit guarantees for aircraft financing.

FAQs

AFIC’s aircraft finance non-payment insurance policy related to the purchase of Boeing and Embraer commercial aircraft covers default losses resulting from a failure to pay by an airline or leasing company. The bank or institutional investor lender submits a proof of loss and the AFIC insurers pay 100% of the missed instalment. Insurers continue to make all scheduled payments to the lender until all outstanding principal and interest is repaid.

There are several reasons why purchasing AFIC’s aircraft finance non-payment insurance policy might be appropriate for a lender, an airline, or a leasing company.

The aircraft finance non-payment insurance policy can:

  • Enable Boeing and Embraer commercial aircraft purchasers to attract funding on more competitive terms due to reduced risk to lenders.
  • Enable lenders to benefit from capital relief under the Basel framework as implemented in Europe and the US. Legal opinion letters are immediately available from outside counsel on a non-reliance basis.

In addition, the AFIC platform provides lenders with a pipeline of transactions and works with lenders to structure financing solutions for transactions with lenders’ existing and prospective airline and leasing company clients.

Why Marsh?

Marsh’s global AFIC team is comprised of experienced specialists in aviation finance and insurance, who together support all aspects of transactions — from origination through repayment, or where applicable, policy response.

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