Sector developments and company hires

ILS

Chris McKeown, former ceo of New Ocean Capital Management, has stepped down from his role as vice chairman of AXA XL to pursue other interests. McKeown was the founding ceo of New Ocean in 2013 and AXA XL completed the acquisition of all third-party ownership interests in the firm in November 2018, transforming New Ocean into an internally-managed entity focused on delivering customised portfolios of risk to third-party investors directly aligned with AXA XL's global underwriting franchise. 

NPL sale

AIB Group has agreed to sell a non-performing loan portfolio to Everyday Finance, as part of a consortium arrangement with Everyday and affiliates of Cerberus Capital Management. The portfolio – which comprises around 2,2000 loans predominantly secured by investment asset properties – has a gross NPE value of €1bn and a fully loaded risk weighted assets position of €750m. At completion, AIB will receive a cash consideration of approximately €800m.

Resi disposal finalised    

NRAM, part of UK Asset Resolution Limited (UKAR), has agreed to sell two separate portfolios of residential owner-occupied mortgages and unsecured loans to Citi for £4.9bn. The majority of financing for the transaction is being provided by PIMCO and financial completion is financial completion is expected within the next few weeks and will enable UKAR to repay all outstanding government loans to HM Treasury. The sale is based on the portfolio position as at 30 September 2018, from which point the purchaser will acquire the risks and rewards of ownership of approximately 66,000 NRAM loans.

UKAR notes that a key consideration in selecting the successful bidder was the continued fair treatment of customers. There will be no changes to the terms and conditions of the loans as a result of this transaction. Customers will receive the same protections for the lifetime of their mortgage as they do under UKAR’s ownership without affecting their ability to re-mortgage. The mortgages will continue to be administered by the same servicing company, providing continuity of service. Customers do not need to take any action, those included in the transaction will be contacted in due course to explain the change in ownership.

Volatility ETF launched

Tabula has launched an ETF that provides short exposure to volatility in North American and European High Yield CDS markets by tracking the return of two credit volatility indices, rebalanced to an equal weighting monthly. Dubbed, Tabula JPMorgan Global Credit Volatility Premium Index UCITS ETF (EUR), it aims to achieve the returns of the JPMorgan Global Credit Volatility Premium Index (JCREVOLP Index), less fees and expenses. To minimise market exposure, each credit volatility index sells and simultaneously delta hedges option strangles on the relevant CDS indices. The fund aims to replicate the performance of the index via an OTC total return swap whereby it receives the return of the index in exchange for agreed payments to the swap counterparty. The fund aims to achieve returns due by investing in cash and non-cash collateral, in the ranges of approximately 10% and 90% of its net asset value respectively.