Residual Value Insurance (RVI) is typically purchased by bank owned leasing companies, independent leasing companies, credit unions and captive finance leasing companies. Residual Value Insurance provides financial companies who are in the business of vehicle leasing a tool allowing them to manage the financial structure and residual (future) risk associated with vehicle collateral. It does so by:
- Providing protection against future market fluctuations in the used vehicle market thereby reducing financial statement volatility
- Converting operating leases to finance leases providing leverage and capital optimization
- Limiting future residual value losses to a fixed, pre-determined amount thereby alleviating concerns of regulators and rating agencies
- Improving yields on asset backed securitizations
The Tri-Arc Residual Value Insurance Program was structured to satisfy the risk needs of the sophisticated lessor. Knowing that risk retention and risk transfer requirements vary from lessor to lessor, we have developed a residual value structure which is flexible enough to adapt to your specific needs. For the lessor who is conservative with their enrollment residual values and has a well defined remarketing program, our program provides FASB compliance plus true catastrophic coverage at a very competitive premium rate. If additional risk retention is desired, the utilization of deductibles can further drive down premium costs.
