EXIM honours Aircraft Finance Insurance Consortium, AirFinance, Apple Bank for Savings, AXIS Insurance, and Gulfstream with Deal of the Year Award for Innovative Risk-Sharing Transaction at EXIM’s 2020 Annual Conference
Washington, D.C. – 11 September 2020 – The Export-Import Bank of the United States (EXIM) has awarded its first private-sector risk-sharing transaction supporting the export of a Gulfstream business aircraft as the agency’s “Deal of the Year” at the 2020 EXIM Annual Conference, the largest conference in the agency’s history, which was held virtually between 9 – 11 September. According to EXIM estimates, the innovative transaction supported hundreds of American jobs at Gulfstream Aerospace Corporation (link is external) in Savannah, Georgia, and at companies in the Gulfstream supply chain, which extends over approximately 80 percent of the United States.
EXIM provided a $10 million medium-term loan guarantee to support the sale of a new Gulfstream G650 aircraft to a large conglomerate in Europe. The transaction was approved by EXIM senior officials under individual delegated authority in February 2019 during the period before the quorum on EXIM’s Board of Directors was restored in May 2019. The transaction was the first EXIM financing in support of Gulfstream aircraft since December 2014.
Apple Bank for Savings (link is external) in New York was the lender for the euro-denominated financing, which was initiated through AirFinance (link is external), an EXIM Qualified Advisor. The risk mitigation was arranged by insurance broker Marsh’s Aircraft Finance Insurance Consortium (AFIC) (link is external) with a private-sector partner, AXIS Insurance (link is external), the specialty insurance company. Apple Bank made two loans for the financed portion of the contract, one supported by an insurance policy from AXIS, and a second one for which EXIM provided a medium-term guarantee. The buyer made a cash payment for the balance of the contract price.
“I want to commend EXIM’s staff and the companies involved in this public-private financing partnership for working together to reach an innovative solution that facilitated this deal and supported hundreds of American jobs in Savannah, Georgia, and across the United States,” said EXIM President and Chairman Kimberly A. Reed. “This creative approach helped EXIM continue to support American jobs despite the lack of a Board quorum. And now, with the Board quorum re-established and the agency reauthorized with a new, bipartisan mandate for a record seven years, we are working hard to help many more American companies export their wonderful ‘Made in the USA’ goods and support the U.S. jobs that make them possible.”
“Gulfstream’s worldwide presence has increased considerably over the past two decades, demonstrating the far-reaching positive effects that have resulted from EXIM’s support of U.S. manufacturers,” said Gulfstream Aerospace Corporation President Mark Burns. “With many competitors based internationally, loan guarantees such as this one from EXIM level the playing field for U.S. companies, allowing us to maintain our competitive edge around the world and helping our international customers to secure the world’s most innovative business jets.”
“It is an honour to be recognized for the Deal of the Year Award involving the Gulfstream sale among EXIM, AFIC, AirFinance, and Apple Bank. We are very proud of this transaction. It is a great example of collaboration between the private insurance market and EXIM to yield a creative financing solution for the client,” said Dana Richard MacKinnon, Senior Vice President of Export Credit and Corporate Finance at Apple Bank for Savings.
“Utilising private insurance allowed EXIM to support a U.S. export while providing a guarantee for a small portion of the sales price. The financing, and, in turn, the Gulfstream sale, would not have happened without EXIM’s participation. The process involving multiple parties was seamless to the customer because all guarantee and lending parties had the same goals and documentation. This structure set the foundation for three subsequent Gulfstream transactions with a private insurance and EXIM partnership, and, hopefully, many more in the future,” said Tom Low, Managing Partner at AirFinance.
Bob Morin, Transaction and Business Development Leader, AFIC, and Managing Director at Marsh JLT Specialty, said, “The AFIC team at Marsh is proud to have worked on this significant project with EXIM. This transaction is a terrific example of how EXIM is able to utilize the private insurance market to support the development of the U.S. aviation industry—at what is a critical moment in its history—while at the same time minimizing the risk to the U.S. taxpayer. Through our collaboration, AFIC was able to complete the deal, while EXIM was able to execute on its statutory mandate of complementing and supplementing financing from the private sector.”
“AXIS Insurance’s Capital Risk Solutions unit, a founding member of Aircraft Finance Insurance Consortium, is delighted to be recognised by EXIM with the Deal of the Year Award for our financing of the Gulfstream transaction. As a co-risk mitigation provider alongside EXIM, we are committed to establishing strong, nimble, and adaptive relationships with our clients and deal partners using our innovative credit-risk insurance underwriting expertise to jointly develop and deliver tailored risk-mitigation products for the benefit of our customers,” said Michael Silas, Head of Capital Risk Solutions at AXIS Insurance.
EXIM’s participation in the transaction was essential to secure support from AXIS for its first business-aircraft transaction. Without the co-risk mitigation strategy, the transaction would not have been completed because business-aircraft financing on acceptable terms was not available, and at the time of approval, EXIM lacked the quorum on its Board of Directors needed to complete the transaction solely as an EXIM financing.
In the time since this transaction was completed, EXIM has approved three additional Gulfstream transactions, two of which involved AXIS Insurance as a co-risk mitigator. EXIM is pursuing similar partnerships with other entities in the agency’s continuing effort to increase private-sector support for its transactions, including financings of general-aviation aircraft. The agency also is considering ways in which such partnerships may be simplified and standardised, such as using reinsurance agreements under which the private insurer would reinsure EXIM for a portion of the risk associated with its guaranteed financings for general-aviation aircraft.