Global re/insurance broker Marsh has launched a Japanese Aircraft Finance Insurance Consortium (Japanese AFIC) in collaboration with Sompo Japan Nipponkoa Insurance Inc. and Sompo International.
The new consortium will offer the same terms as Marsh’s global AFIC program to Japanese financial institutions through a Japanese insurer.
Launched in 2017, Marsh’s AFIC provides an alternative aircraft finance insurance product for banks and capital market investors that are funding Boeing aircraft.
AFIC can help airlines to obtain more efficient financing by utilising insurance to protect the lender’s exposure to default for the duration of the loan.
The broker also revealed that EL Al Israel Airlines Limited is the first airline to access Japanese AFIC, having received a loan from the Development Bank of Japan Inc. (DBJ) to purchase a new Boeing 787-9 aircraft.
Using Japanese AFIC’s non-payment insurance product, DBJ is protected against credit default risk by EL AL for the duration of the loan.
Robert Morin, AFIC Transaction and Business Development Leader, Marsh, said: “Since its launch, AFIC has made a significant contribution to the diversification and further development of the aircraft finance market.
“The work of Marsh, DBJ, Sompo Japan Nipponkoa and Sompo International, SBI Leasing Service, and ABL Aviation with EL AL to finance the new Boeing 787-9 aircraft marks a significant milestone in AFIC’s global development,” he continued.
“Through the creation of Japanese AFIC many Japanese financial institutions, especially regional banks, can reduce the lending risks associated with aircraft finance and get involved in this dynamic industry, and offer airline financing solutions with greater confidence.”
Dganit Palti, Chief Financial Officer (CFO) at EL AL, also commented: “EL AL Israel Airlines is happy to finance an aircraft, for the first time by a Japanese bank. Such financing emphasises the strengthening of the connection between the two countries.
“We believe that those connections will be further strengthened by opening the direct route between Tel Aviv and Tokyo by EL AL in March 2020.”
