Ballantyne Re Plc: A Landmark Restructuring of a Distressed Reinsurance Securitisation
This article describes the landmark restructuring led by FTI Consulting Corporate Finance & Restructuring, in conjunction with our Global Insurance Services team.
FTI Consulting was engaged by Ambac Assurance UK as lead advisor to the restructuring of Ballantyne Re Plc, an Irish capital markets securitisation of a closed block of US life insurance policies. This complex restructuring which was developed over a number of years enabled the accelerated return of $800 million to senior noteholders and commutation of Ambac’s financial guarantee liabilities.
Combining our expertise in both restructuring and the insurance sector, FTI Consulting led the development and implementation of this multi-faceted cross-jurisdictional restructuring. This involved one of the largest Regulation XXX closed book reinsurance transactions in recent years and the ‘unwind’ of the securitisation structure. The restructuring was implemented through an Irish Scheme of Arrangement, the first use of an Irish Scheme to restructure New York law debt. The restructuring was completed successfully in June 2019.
Ballantyne Re Plc was a capital markets securitisation established in 2005 to provide reinsurance for a defined block of US level premium term life insurance policies. At inception, the block consisted of 1.7m individual polices with a face amount of $183bn and a peak statutory reserve requirement of $2.3bn. To meet the collateral obligations under the reinsurance agreement, Ballantyne issued $1.65bn senior notes and $270m junior notes. Proceeds were used to fund a Reinsurance Trust Account for the benefit of the counterparty to the reinsurance agreement.