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KBRA Assigns Preliminary Ratings to Insurance Administration Fee Asset-Backed Notes, Series 2018-1

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Kroll Bond Rating Agency (KBRA) assigns a preliminary rating of BBB-
(sf) to Insurance Administration Fee Asset-Backed Notes, Series 2018-1.
The notes are newly issued asset-backed securities backed by a portfolio
of administrative fee paid to Lombard International Administration
Services Company, LLC ("LIAS").

The notes are secured by a portfolio of administrative fees (the
"Receivables"), which are paid to LIAS for administrative services
rendered pursuant to an administrative services agreement between LIAS
and certain insurance carriers. The Receivables are typically calculated
as a specified percentage of the cash surrender value ("CSV") associated
with a portfolio of separate account bank-owned life insurance ("BOLI"),
corporate-owned life insurance ("COLI") policies and variable life
insurance policies for high net worth ("HNW") individuals. The
Receivables also include per-insured-life administration fees and in the
case of certain fees, as a percentage of the CSV of assets of a policy
allocated to a particular set of investments within the separate
account. The policies were issued to 79 corporations and banks and 72
HNW individuals.

The portfolio contains 310,537 insured lives from Hartford Life
Insurance Company and Hartford Life and Annuity Insurance Company where
the weighted average age (by CSV) of the insureds is approximately 61.
The aggregate CSV of the portfolio is approximately $39.8 billion as of
December 31, 2017. Approximately, $18.0 billion of CSV is attributable
to inside build-up of the policies, i.e., accretion in excess of the
in-force premiums paid at the inception of the respective policies. By
CSV, BOLI policies, COLI policies and policies to HNW individuals
represent approximately 88.5%, 10.3% and 1.2%, respectively, of the
portfolio. The top 10 policyholders represent approximately 81.9% of the
portfolio by CSV. In 2017 the administrative fees received by LIAS as a
percentage of CSV was approximately 0.12% and the net revenue collected
was approximately $45.4 million. The net present value of the
administrative fees is approximately $448 million based on a discount
rate of approximately 11.2% per annum.

KBRA analyzed the transaction using the Global
General Rating Methodology for Asset-Backed Securities
published
on November 28, 2017, Global
Bank & Bank Holding Company Rating Methodology
published on
February 19, 2016 and Global
Insurer & Insurance Holding Company Rating Methodology

published on October 10, 2017. In applying the methodologies, KBRA
developed credit estimates for the carriers and the top three
policyholders in the portfolio. The top three policyholders comprise
approximately 71.8% of CSV and approximately 50.7% of the anticipated
net revenue in the first year of the transaction. In addition, KBRA
retained the services of an actuarial firm, Elucidor, LLC, to assist
KBRA in analyzing a report prepared by a nationally recognized actuarial
firm retained by LIAS, to provide a valuation of the administrative fees
associated with the policies.

KBRA believes the transaction benefits from sufficient credit
enhancement and a structure that accelerates principal payments to the
rated notes upon weakening asset performance.

       
Class     Rating     Initial Principal Balance
Class A Notes     BBB- (sf)     $300,000,000
 

To view the report, click here.

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required,
pursuant to SEC Rule 17g-7, to provide a description of a transaction's
representations, warranties and enforcement mechanisms that are
available to investors when issuing credit ratings. KBRA's disclosure
for this transaction can be found in the report available here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
recognized by the National Association of Insurance Commissioners as a
Credit Rating Provider and a certified Credit Rating Agency (CRA) by the
European Securities and Markets Authority (ESMA). Kroll Bond Rating
Agency Europe Limited is registered with ESMA as a CRA.

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