Allen & Overy has advised Lloyds Banking Group and Bank of America Merrill Lynch as arrangers on the UK’s first securitisation of insurance premium loans, a GBP300 million issuance originated by Premium Credit Limited (PCL).

This innovative triple-A-rated transaction, backed by a speciality asset class, borrows from UK residential and credit card master trust transactions to create its own unique structure. This enables Premium Credit to access the public market frequently via a programme structure as well as access funds via an existing warehouse.

This pioneering issuance offers investors the opportunity to further diversify risk via exposure to a new asset class and is a key example of how securitisation can be a viable and cost-effective funding source for companies.

The Allen & Overy team advising the banks was based in London and led by partner Angela Clist, assisted by associate Martin Brennan. Tax advice was provided by partner Chris Harrison and associate Sorsha Reilly.

Angela commented: “This was a challenging and rewarding matter due to the relatively unique nature of the receivables and the structure. Investors will be pleased with the opportunity to put their money to work via a new asset class, and we expect other insurance premium finance companies to begin considering securitisation as a useful tool within the funding toolbox. The team is delighted to see the transaction come to a successful close.”