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Banking Interpretations

NYSBL     554 &
                555
                
August 14, 2009 

[---]

Re: Premium Finance Securitization Trust

Dear Mr. [---]:

Your letter of June 25, 2009 asks for our confirmation that the securitization vehicles described below will not have to be licensed in New York as premium finance agencies, as long as the origination and servicing of the premium finance agreements acquired by the vehicles is conducted by [---]  (the "Licensee"), which is licensed as a premium finance agency under Article XII-B of the New York Banking Law.  It notes that the availability of securitization financing, including under the Federal Reserve's Term Asset-Backed Securities Loan Facility ("TALF") is critical to the future funding of the premium finance business.

Your letter states that, in a securitization transaction, premium finance agreements originated by the Licensee would be sold to an intermediate special purpose vehicle (the "Intermediate Seller"), the sole purpose of which is to further sell such agreements to a trust or other special purpose vehicle (the "Issuer", and, together with the Intermediate Seller, the "Securitization Vehicles"). Each of the Securitization Vehicles would be formed by, and I00% directly or indirectly beneficially owned by, the Licensee or an affiliate of the Licensee.  Neither Securitization Vehicle would originate or service any premium finance agreements.  The sole purpose of the Issuer would be to issue asset-backed securities (each issuance, a "Financing"), to use the proceeds of Financings to purchase premium finance agreements originated by the Licensee, and to use the payments under the premium finance agreements to satisfy the Issuer's obligations under the Financings.  The sole purpose of the Intermediate Seller would be to purchase premium finance agreements originated by the Licensee and to sell them to the Issuer.  All servicing of the premium finance agreements will continue to be performed by the Licensee, under a servicing agreement among the Securitization Vehicles and the Licensee. Only the Licensee will interact with the obligors under the premium finance agreements and the Licensee will be responsible for all aspects of compliance with Article XII-B.

Section 555 of the Banking Law prohibits any person (other than a lending institution or an authorized insurer) from engaging in the business of a premium finance agency without a license from the Superintendent of Banks. The term "premium finance agency" is defined in Banking Law Section 554(7) to include a person engaged in the "business" of acquiring premium finance agreements from insurance agents or brokers or other premium finance agencies.

We would not consider the Securitization Vehicles to be engaged in the business of acquiring premium finance agreements, such as would require them to become licensed under Section 555, in the circumstances described above, i.e., the Securitization Vehicles acquire premium finance agreements originated by the Licensee, do not interact with the obligors under the premium finance agreements, and have all servicing of the premium finance agreements performed by the Licensee; and the Licensee remains responsible for all aspects of compliance with Article XII-B.

Should you have any questions regarding this letter, please contact the undersigned at (212) 709­1663 or Gene C. Brooks at (212) 709-1641.

Very truly yours,

Marjorie E. Gross
Deputy Superintendent & General Counsel