ROADSHOW SCRIPT AND TALKING POINTS
Quorum Receivables Funding 2022-1 LLC
Insurance Premium Finance Asset-Backed Notes Rule 144A / Regulation S Offering
Prepared by: Calderwood & Harkness LLP, 601 Lexington Avenue, New York, NY 10022
Prepared for: Quorum Insurance Holdings Corp. and Ridgeline Capital Markets LLC
Date: October 22, 2022
Matter No.: 1025-00007
CONFIDENTIAL — For Presenter Use Only; Not for Distribution to Investors
Authors: Yuki Nakamura (Calderwood & Harkness LLP), with input from Douglas Carmichael (Calderwood & Harkness LLP), Julian Weatherstone and Rebecca Tran (Ridgeline Capital Markets LLC)
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Section 1: Introduction and Purpose
1.1 Purpose of This Document
This document provides suggested talking points and a structured script for presenters during the virtual investor roadshow for the Quorum Receivables Funding 2022-1 LLC notes offering (the "Offering"), commencing on October 24, 2022. It is intended to serve as the primary reference tool for all individuals who will participate in investor-facing presentations in connection with the Offering.
This script has been designed for use by QIH management — specifically Marcus Devereaux, Chief Executive Officer; Priya Raghavan, Chief Financial Officer; and Sandra Ling-Hwang, Treasurer — as well as by Ridgeline Capital Markets LLC personnel, specifically Julian Weatherstone, Head of ABS Origination, and Rebecca Tran, Managing Director, Insurance Finance ABS. Each presenter should familiarize himself or herself thoroughly with the contents of this document and with the underlying Preliminary Offering Memorandum prior to the first roadshow session.
All statements made during the roadshow, whether scripted or improvisational, must be consistent with the Preliminary Offering Memorandum (version 3, dated October 12, 2022) and the supporting Issuer Supplement (Pool Stratification Tables). No information should be conveyed to any investor that is not contained in, or directly derivable from, these documents. To the extent that a question arises for which the answer is not clearly addressed in the Offering Memorandum or this script, presenters should follow the escalation procedures set forth in Section 12.6 below.
This document is intended solely for internal use by the presenters and their legal advisors. Under no circumstances should this document be distributed to, shared with, or made available to any investor, prospective investor, or any person outside the deal team without the prior written consent of Calderwood & Harkness LLP and Ridgeline Capital Markets LLC.
1.2 Roadshow Format and Schedule
The investor roadshow will be conducted in a virtual format via video conference. The roadshow is scheduled to commence on October 24, 2022, and is expected to conclude on or about November 2, 2022, subject to extension as the bookbuilding process requires.
Sessions will consist of one-on-one meetings and small group meetings with qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and with non-U.S. persons in reliance on Regulation S under the Securities Act. Ridgeline Capital Markets LLC, as sole placement agent, is responsible for scheduling all sessions and for verifying the qualification of each attending investor or investor representative prior to the commencement of any substantive discussion.
The typical session length is 45 minutes, structured as follows: approximately 25 to 30 minutes for the presentation, followed by approximately 15 to 20 minutes for questions and answers. Presenters should manage time carefully to ensure that there is adequate opportunity for investor questions, as the Q&A portion is often the most important segment from the investor's perspective.
1.3 Compliance Guardrails — Critical Reminders
The following compliance guidelines are mandatory. Every presenter must read, understand, and comply with each of the following requirements. Failure to adhere to these guidelines could result in legal liability for the presenter, for QIH, and for Ridgeline Capital Markets LLC, and could jeopardize the Offering.
Offering Status. This Offering is a private placement of securities conducted under Rule 144A and Regulation S. The notes have NOT been and will NOT be registered under the Securities Act of 1933, as amended, or the securities laws of any state. All presenters must understand the legal significance of this fact and conduct themselves accordingly.
Investor Qualification. All investors must be verified as QIBs (for Rule 144A) or non-U.S. persons (for Regulation S) before any substantive discussion of the Offering takes place. If there is any doubt as to an investor's qualification, the session must not proceed until Ridgeline Capital Markets LLC has confirmed the investor's status.
Materials Distribution. Presenters must NOT distribute any written materials other than the Preliminary Offering Memorandum (version 3, dated October 12, 2022) and the Issuer Supplement (Pool Stratification Tables). No slide decks, fact sheets, term sheets, or other written or electronic materials may be shared with investors unless such materials have been reviewed and approved by Calderwood & Harkness LLP and Ridgeline Capital Markets LLC.
Consistency with Offering Memorandum. All oral statements made during the roadshow must be consistent with the Preliminary Offering Memorandum. Presenters must NOT make any representation, warranty, or statement of fact that is not contained in or directly derivable from the Offering Memorandum. If a presenter is uncertain whether a particular statement is consistent with the Offering Memorandum, the presenter should not make the statement and should instead follow the escalation procedure described below.
No Projections or Guarantees. Presenters must NOT provide any projection, forecast, or guaranty of future performance, credit losses, delinquency rates, recovery rates, or spreads. Historical performance data may be presented for informational purposes only, as set forth in the Offering Memorandum, and must be accompanied by the caveat that historical performance is not indicative of future results.
Escalation Procedure. If an investor asks a question for which the answer is uncertain or outside the scope of the Offering Memorandum, the presenter should respond: "We will need to get back to you on that." The question must then be immediately flagged to Calderwood & Harkness LLP (Yuki Nakamura, direct line, or Douglas Carmichael, direct line). No follow-up response may be communicated to any investor until it has been reviewed and approved by Calderwood & Harkness.
Pricing and Spread Discussions. Presenters must NOT discuss pricing, spread levels, or coupon in a way that could be construed as a commitment or an indication of final terms. Presenters may refer to "coupon guidance" as set forth in the term sheet but should make clear that pricing will be determined through the bookbuilding process and that no commitment is being made.
Opening Disclaimer. All sessions must begin with the standard Rule 144A / Regulation S disclaimer as set forth in Section 2.1 of this document. This disclaimer must be read verbatim. No session may proceed without the disclaimer being delivered in full.
Section 2: Opening Remarks and Disclaimers
2.1 Standard Rule 144A / Regulation S Disclaimer (Read Verbatim)
The following disclaimer must be read verbatim at the beginning of every roadshow session, without exception. Presenters should not paraphrase, abbreviate, or skip any portion of this disclaimer. The designated reader for this disclaimer is Julian Weatherstone (Ridgeline Capital Markets LLC), or, in his absence, Rebecca Tran (Ridgeline Capital Markets LLC).
"This presentation is being made in connection with a proposed offering of asset-backed notes by Quorum Receivables Funding 2022-1 LLC. The notes have not been and will not be registered under the Securities Act of 1933, as amended, and may only be offered or sold to qualified institutional buyers as defined in Rule 144A or to persons outside the United States in accordance with Regulation S."
"This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The offering is being made solely on the basis of the Preliminary Offering Memorandum dated October 12, 2022 and any supplements thereto. Investors should read the Preliminary Offering Memorandum in its entirety, including all risk factors, before making any investment decision."
"Ridgeline Capital Markets LLC is acting as structuring agent, lead bookrunner, and sole placement agent for this offering."
Following delivery of the disclaimer, the presenter may proceed to introductions.
2.2 Presenter Introductions
Each presenter should state his or her name, title, organization, and role in the transaction. Introductions should be brief — no more than two to three sentences per person. The suggested order of introductions is as follows:
1. Julian Weatherstone (Ridgeline Capital Markets LLC) opens the session, delivers the disclaimer, and serves as moderator. Suggested introduction: "Good morning [afternoon]. I'm Julian Weatherstone, Head of ABS Origination at Ridgeline Capital Markets. I'll be moderating today's session and providing an overview of the capital structure and market positioning."
2. Marcus Devereaux or Priya Raghavan (Quorum Insurance Holdings Corp.) provides the corporate overview. Suggested introduction (for Mr. Devereaux): "I'm Marcus Devereaux, Chief Executive Officer of Quorum Insurance Holdings Corp. I'll be providing an overview of our company, our premium finance business, and why we believe this asset class represents a compelling investment opportunity." Suggested introduction (for Ms. Raghavan, if appearing in Mr. Devereaux's place or alongside him): "I'm Priya Raghavan, Chief Financial Officer of Quorum Insurance Holdings Corp. I'll be discussing our financial profile and the premium finance platform."
3. Sandra Ling-Hwang (Quorum Premium Finance LLC / QIH) covers the origination platform and pool characteristics. Suggested introduction: "I'm Sandra Ling-Hwang, Treasurer of Quorum Insurance Holdings and head of our premium finance subsidiary, Quorum Premium Finance LLC. I'll be walking you through our origination platform, underwriting standards, and the specific characteristics of the receivables pool backing this transaction."
4. Rebecca Tran (Ridgeline Capital Markets LLC) covers the capital structure and credit analysis. Suggested introduction: "I'm Rebecca Tran, Managing Director in Insurance Finance ABS at Ridgeline Capital Markets. I'll be discussing the transaction structure, credit enhancement, and key structural protections."
Note Regarding Legal Counsel. Douglas Carmichael or Yuki Nakamura of Calderwood & Harkness LLP may be on the call in a monitoring capacity. They should NOT present, make any statements, or answer investor questions directly unless an investor specifically asks a legal question and the answer is clearly and directly addressed in the Offering Memorandum. In all other cases, presenters should defer to the Offering Memorandum or follow the escalation procedure. If counsel is on the call, a brief acknowledgment is appropriate — for example: "We also have counsel from Calderwood & Harkness on the line, though they are here in a monitoring capacity."
2.3 Agenda Overview
Following introductions, Julian Weatherstone should provide a brief overview of the agenda. The following talking point is suggested:
"Today's presentation will cover the following topics: first, an overview of Quorum Insurance Holdings Corp. and its premium finance business; second, the receivables pool and historical performance; third, the transaction structure and capital stack; fourth, credit enhancement and structural protections; fifth, key risk factors; and finally, we'll open the floor for your questions. We expect the presentation portion to last approximately 25 to 30 minutes, leaving ample time for discussion."
Section 3: Corporate Overview — Quorum Insurance Holdings Corp.
3.1 Company Snapshot
This section is designated primarily for Marcus Devereaux (CEO) or Priya Raghavan (CFO). The presenter should convey the strength, scale, and stability of Quorum Insurance Holdings Corp. as the ultimate parent and sponsor of this transaction. The following key data points should be communicated:
Quorum Insurance Holdings Corp. (NYSE: QIHC) is a publicly traded Delaware corporation headquartered at 400 Atlantic Street, Suite 2200, Stamford, Connecticut 06901. The company's senior management team includes Marcus Devereaux, Chief Executive Officer; Priya Raghavan, Chief Financial Officer; Nolan Whitford, General Counsel; and Sandra Ling-Hwang, Treasurer.
For fiscal year 2021, QIH reported consolidated revenue of approximately $3.8 billion. The company operates across three principal business segments: property and casualty insurance distribution, premium finance lending, and insurtech software-as-a-service ("SaaS") platforms. QIH carries unsecured credit ratings of BBB from Brindoval Ratings Inc. and Baa2 from Pinnacle Rating Services LLC, both with stable outlooks.
Talking Point: "Quorum is a diversified insurance and fintech company with nearly four decades of operating history and a strong investment-grade credit profile. Our scale, diversification, and proven track record provide a solid foundation for this securitization."
The presenter should emphasize QIH's public company status and the transparency that accompanies it, including regular SEC filings, audited financial statements, and ongoing disclosure obligations. The investment-grade credit profile of the sponsor is an important differentiator in the ABS market and should be highlighted.
3.2 Premium Finance Business Overview
The premium finance lending business is conducted through Quorum Premium Finance LLC ("QPF"), a wholly owned Delaware limited liability company subsidiary of QIH. QPF originates and services insurance premium finance loans to commercial policyholders across all 50 states and the District of Columbia.
As of the most recent reporting period, QPF's total premium finance receivables portfolio totals approximately $2.1 billion on a pre-securitization basis. The portfolio has been built over more than two decades of consistent origination activity, and QPF has established itself as one of the leading platforms in the insurance premium finance space.
QPF is managed by Sandra Ling-Hwang, who serves as QIH's Treasurer and oversees all aspects of the premium finance business, including origination, servicing, collections, and capital markets activity. QPF's principal office is located at QIH's headquarters at 400 Atlantic Street, Suite 2200, Stamford, Connecticut 06901.
Talking Point: "QPF is one of the leading originators of insurance premium finance loans in the United States, with a seasoned portfolio exceeding $2 billion and a track record of consistently low credit losses. The platform is fully licensed in all 50 states and has deep relationships with insurance agents and brokers across the country."
3.3 What Is Insurance Premium Finance?
This section is important because not all ABS investors will be familiar with the insurance premium finance asset class. Sandra Ling-Hwang is the designated responder for this topic, though Marcus Devereaux or Priya Raghavan may also address it. The presenter should explain the product clearly and concisely, emphasizing the key features that differentiate it from other lending products.
Insurance premium finance loans allow commercial policyholders to finance their insurance premiums over the term of the underlying insurance policy, rather than paying the full annual premium in a single lump sum at policy inception. This financing serves a legitimate and important commercial need: many businesses — particularly small and mid-size enterprises — prefer to manage their cash flow by spreading their insurance costs over the policy period, much as they would with a lease or equipment financing arrangement.
The loans originated by QPF are short-term, with an average original term of approximately 9.2 months. They are fully amortizing, meaning that the borrower makes regular monthly payments of principal and interest over the life of the loan. There is no balloon payment or residual value risk. Each loan is secured by the borrower's right to receive a refund of unearned premiums from the insurance carrier in the event that the underlying insurance policy is cancelled.
This last feature — the unearned premium refund right — is the key credit differentiator of insurance premium finance. Upon a borrower's default, the lender has the contractual right to cancel the underlying insurance policy and to receive the unearned premium directly from the insurance carrier. This refund represents the portion of the premium that corresponds to the remaining, unexpired term of the policy. Because the loan balance amortizes at a rate that is generally faster than the rate at which the unearned premium declines, the refund typically exceeds the outstanding loan balance, providing a built-in loss mitigation mechanism.
Talking Point: "Insurance premium finance is one of the most creditworthy commercial lending asset classes because the lender's recovery is backed by the unearned premium refund from a rated insurance carrier, not by the borrower's general creditworthiness. This is a fundamentally different risk profile than traditional consumer or commercial ABS."
3.4 Competitive Advantages of QPF
Presenters should highlight the following competitive advantages of QPF's origination and servicing platform:
Nationwide Licensing. QPF is licensed to originate premium finance loans in all 50 states and the District of Columbia. This nationwide licensing capability allows QPF to serve a broad and diverse set of commercial policyholders and insurance intermediaries, and provides the geographic diversification that is a key credit strength of the receivables pool.
Proprietary Technology Platform. QPF operates a proprietary origination technology platform that integrates automated compliance and underwriting controls directly into the loan origination workflow. This technology enables rapid processing of loan applications, real-time verification of eligibility criteria, and consistent application of underwriting standards across all geographies and channels. The platform also supports automated generation of notices of cancellation, premium refund collection, and payment processing.
Agent and Broker Relationships. QPF has cultivated long-standing relationships with a large network of insurance agents and brokers who serve as the primary channel for loan origination. These relationships, built over decades, provide QPF with a stable and diversified source of origination volume.
Low Obligor Concentration. The receivables portfolio is highly granular, with the largest single obligor representing only 0.38% of the pool. This low concentration reflects the nature of the insurance premium finance market, where loan balances are modest and the borrower base is broad.
Scaled Servicing Infrastructure. QPF's servicing infrastructure is designed to support a portfolio of approximately $2.1 billion in receivables, with proven capabilities in collection, default management, policy cancellation processing, and premium refund recovery. The servicing platform has been tested through multiple economic cycles, including the COVID-19 pandemic, and has delivered consistently strong performance.
Section 4: The Receivables Pool
4.1 Pool Characteristics (Cut-Off Date: June 30, 2022)
This section should be presented by Sandra Ling-Hwang (QPF/QIH). The following key characteristics of the receivables pool, as measured on the statistical cut-off date of June 30, 2022, should be communicated to investors:
The pool is comprised of insurance premium finance loans originated by QPF in the ordinary course of business, each of which satisfies the eligibility criteria set forth in the transaction documents. The cut-off date for the initial pool is June 30, 2022. During the revolving period, additional eligible receivables will be purchased from QPF using collections on existing receivables, subject to the concentration limits and eligibility criteria described in Section 7.4 below.
Talking Point: "The pool is highly granular with over 82,000 loans and an average balance of only about $7,400, which provides significant diversification benefit. The short weighted average remaining term of 5.7 months means that the pool turns over rapidly, generating consistent cash flows for noteholders."
The presenter should emphasize that the high granularity and low average balance of the pool are among the strongest credit characteristics of premium finance ABS. In a pool of this size and composition, no single loan or small group of loans can have a material impact on the overall performance of the portfolio.
4.2 Concentration Analysis
Obligor and geographic concentration are key considerations for ABS investors, and presenters should be prepared to address these topics proactively. The following concentration data should be presented:
No single state exceeds the 20% concentration limit that is embedded in the transaction structure as an eligibility criterion for receivables included during the revolving period. The geographic distribution of the pool reflects the distribution of commercial insurance activity across the United States, with natural concentrations in the largest commercial markets.
Talking Point: "Obligor concentration is extremely low — the largest single borrower represents less than 0.4% of the pool — and geographic diversification spans all 50 states. The concentration limits embedded in the structure provide additional safeguards during the revolving period."
4.3 Historical Performance
Historical performance data is one of the most important data sets for ABS investors. The following key metrics should be presented:
The three-year average net loss rate of 0.42% reflects QPF's consistent underwriting discipline and the inherent credit strength of the premium finance asset class. Notably, this period includes the full impact of the COVID-19 pandemic in 2020 and 2021, during which QPF's loss experience did not materially deteriorate.
Talking Point: "QPF's historical credit performance has been outstanding, with a three-year average net loss rate of just 42 basis points, reflecting the self-liquidating nature of premium finance receivables and the built-in unearned premium refund recovery mechanism. Even through the unprecedented disruption of the COVID-19 pandemic, losses remained consistently low."
Critical Note to Presenters: When presenting historical performance data, do NOT characterize or predict future performance. All historical data should be presented as historical fact, with an appropriate caveat that past performance is not indicative of future results. If an investor asks whether the presenter expects similar performance going forward, the appropriate response is: "We can only point to the historical data as presented in the Offering Memorandum. Historical performance is not indicative of future results, and investors should review the risk factors section of the OM carefully."
4.4 Collateral Quality — Unearned Premium Refund Mechanism
The unearned premium refund mechanism is the single most important credit feature of insurance premium finance ABS, and presenters should be prepared to explain it clearly and thoroughly. This topic is often of particular interest to investors who are new to the asset class.
Each loan in the pool is secured by the borrower's right to receive a refund of unearned premiums from the insurance carrier upon cancellation of the underlying insurance policy. This right is assigned to QPF (and, through the securitization transfer chain, to QRF 2022-1) at the time of loan origination.
The mechanics of recovery upon default are straightforward. When a borrower defaults — typically by failing to make a scheduled monthly payment — QPF issues a notice of cancellation to the insurance carrier. Upon cancellation, the carrier is obligated to return the unearned premium — that is, the portion of the premium corresponding to the remaining, unexpired portion of the policy term — directly to QPF as the assignee of the borrower's refund rights.
Because the "collateral" underlying each loan is effectively a claim on a rated insurance carrier, the recovery upon default does not depend on the borrower's financial condition, assets, or willingness to pay. Instead, it depends on the creditworthiness and claims-paying ability of the insurance carrier. The insurance carriers in this pool are, as a class, highly rated entities, and the transaction imposes a concentration limit of 15% per carrier to limit single-carrier exposure.
Talking Point: "The key credit differentiator of premium finance ABS is that recovery upon default does not depend on the borrower's assets or financial condition — it depends on the creditworthiness of the insurance carrier. This is fundamentally different from traditional consumer or commercial ABS. In effect, the lender's loss-given-default is a function of the financial strength of rated insurance companies, not of unrated commercial borrowers."
4.5 Pool Stratification Summary
For detailed breakdowns of the receivables pool by state, carrier, remaining term, APR band, loan balance, and delinquency status, presenters should reference the Issuer Supplement (Pool Stratification Tables, dated October 12, 2022). The Issuer Supplement has been provided to all investors who have confirmed their QIB or Regulation S status.
Presenters should be familiar with the key data points in the stratification tables but should direct investors to the Supplement for detailed analysis. If specific stratification questions arise during Q&A, Sandra Ling-Hwang is the designated responder. If a question requires data that is not readily available, presenters should follow the escalation procedure: "We'll confirm that data point for you and follow up after the call."
Section 5: Transaction Structure
5.1 SPV Structure and Bankruptcy Remoteness
This section should be presented by Rebecca Tran (Ridgeline Capital Markets LLC), with support from Sandra Ling-Hwang on servicing-related topics. The structural aspects of the transaction are critical to investor confidence and should be presented with clarity and precision.
The issuer of the notes is Quorum Receivables Funding 2022-1 LLC ("QRF 2022-1"), a Delaware limited liability company organized as a bankruptcy-remote special purpose entity. QRF 2022-1 was formed for the sole purpose of issuing the notes and acquiring the receivables that serve as collateral for the notes. It has no employees, no operating business, and no assets other than the receivables pool, the related security interests, and certain cash accounts held by the indenture trustee.
The sole member of QRF 2022-1 is Quorum Receivables Holding LLC ("QRH"), an intermediate bankruptcy-remote special purpose entity that serves as the conduit for the transfer of receivables from the originator to the issuer. The sole member of QRH is Quorum Premium Finance LLC ("QPF"), the originator and servicer of the receivables.
To protect the bankruptcy remoteness of the SPV structure, independent managers have been appointed for both QRF 2022-1 and QRH. Fortbridge Corporate Services LLC provides the independent managers: Timothy R. Callan serves as independent manager of QRF 2022-1, and Eleanor M. Vasquez serves as independent manager of QRH. These independent managers are tasked with ensuring compliance with separateness covenants — including the maintenance of separate books and records, separate bank accounts, and arm's-length transactions between the SPVs and their affiliates — and with protecting against involuntary bankruptcy filings.
The transfer chain for the receivables is as follows:
• QPF transfers receivables to QRH (structured as a true sale);
• QRH transfers receivables to QRF 2022-1 (structured as a true sale / contribution);
• QRF 2022-1 issues the notes to investors, secured by a first-priority security interest in the receivables and related assets, granted to Calvoneth Trust Company, N.A. as indenture trustee for the benefit of the noteholders.
Talking Point: "The two-tier SPV structure with independent managers and separateness covenants is designed to insulate the receivables pool and the noteholders from any bankruptcy or credit event of the sponsor, Quorum Insurance Holdings Corp. This is a well-established structural approach in the ABS market and provides a high degree of legal certainty regarding the isolation of the collateral."
5.2 True Sale and Security Interest
The characterization of the transfers from QPF to QRH and from QRH to QRF 2022-1 as "true sales" is essential to the bankruptcy remoteness of the transaction. If these transfers were recharacterized as secured loans rather than sales, the receivables could potentially be treated as property of QPF's bankruptcy estate in the event of a QPF bankruptcy, which would expose noteholders to the claims of QPF's general creditors.
Calderwood & Harkness LLP, as issuer's counsel, will deliver true sale opinions at closing for both the QPF-to-QRH and QRH-to-QRF 2022-1 transfers. These opinions will confirm that, under applicable law, the transfers should be respected as true sales and not recharacterized as secured financings.
As a back-up measure, the transaction includes a grant of security interest at each transfer level. Specifically, in the event that any transfer were recharacterized as a secured loan, the transferor has granted a security interest in the transferred receivables to the transferee. UCC-1 financing statements will be filed with the Delaware Secretary of State to perfect these back-up security interests.
Talking Point: "We have structured the transfer chain to achieve true sale treatment for bankruptcy law purposes, with back-up perfected security interests at each level. Calderwood & Harkness will deliver true sale opinions at closing, and UCC-1 financing statements will be filed to perfect the back-up security interests."
5.3 Servicing
Quorum Premium Finance LLC ("QPF") will serve as the servicer of the receivables pool. QPF has extensive experience servicing premium finance receivables and currently services a portfolio of approximately $2.1 billion. QPF's servicing responsibilities include billing and collecting payments from obligors, processing premium refund recoveries upon default, maintaining loan-level records, reporting to the indenture trustee, and remitting collections to the trust accounts.
The servicing fee is 1.00% per annum of the outstanding pool balance. Based on the initial pool balance of $612,000,000, this translates to approximately $510,000 per month, or approximately $6,120,000 per year, payable monthly in arrears from the collections waterfall. The servicing fee is designed to compensate QPF for the costs of servicing and to align QPF's incentives with the interests of the noteholders.
To provide an additional layer of protection for noteholders, Northvane Bank, N.A. has been appointed as back-up servicer. Northvane Bank will maintain warm standby capability, meaning that it will be prepared to assume full servicing responsibilities within 30 days of a servicer default event. Northvane's back-up servicer obligations include maintaining familiarity with QPF's servicing platform, receiving periodic data feeds, and participating in annual readiness reviews.
The back-up servicer fee payable to Northvane Bank is $50,000 per annum ($12,500 per quarter), payable from the collections waterfall.
Talking Point: "QPF is one of the most experienced premium finance servicers in the market, and the appointment of Northvane Bank as warm back-up servicer provides additional comfort for investors. Northvane maintains ongoing readiness to assume servicing in the event of any disruption."
5.4 Roles of Key Transaction Parties
The following transaction parties play important roles in the Offering:
Calvoneth Trust Company, N.A. — Indenture trustee, paying agent, calculation agent, securities intermediary, and custodian. Contact: Gerald K. Fontaine, Senior Trust Officer. Corporate Trust Office: 600 Travis Street, Suite 5800, Houston, Texas 77002. Haverford serves as the fiduciary representative of the noteholders and is responsible for enforcing the terms of the indenture, distributing payments to noteholders, maintaining the custodial accounts, and performing calculations related to the payment waterfall.
Northvane Bank, N.A. — Back-up servicer and provider of the $25 million liquidity facility. Contact: Diane Coletti, Managing Director. Northvane's dual role as back-up servicer and liquidity provider provides both operational and financial support for the transaction.
Ridgeline Capital Markets LLC — Structuring agent, lead bookrunner, and sole placement agent. Ridgeline is responsible for the design and marketing of the transaction and for the placement of the notes with qualified investors.
Calderwood & Harkness LLP — Issuer's counsel. Calderwood & Harkness has provided legal advice to QIH and QRF 2022-1 in connection with the structuring and documentation of the Offering and will deliver the true sale opinions and tax opinion at closing.
Calloway & Brandt LLP — Underwriter's counsel. Contact: Harrison Collier, Lead Partner. Calloway & Brandt represents Ridgeline Capital Markets in connection with the Offering.
Ashfield & Greer LLP — Trustee's counsel. Contact: Vivian Sato, Lead Partner. Ashfield & Greer represents Calvoneth Trust Company in connection with the Offering.
Meridian Ledger LLP — Independent auditors of QIH. Contact: Robert Falcone, Engagement Partner. Meridian Ledger has provided audited financial statements of QIH and will deliver an agreed-upon procedures letter and comfort letter in connection with the Offering.
Veristead Analytics LLC — Third-party verification agent for pool data tape reconciliation. Contact: Katharine Drummond, Managing Director. Veristead has independently verified the accuracy and completeness of the loan-level data tape used to construct the receivables pool.
Brindoval Ratings Inc. and Pinnacle Rating Services LLC — Rating agencies. Both agencies have assigned preliminary ratings to the notes, as described in Section 8 below.
Section 6: Capital Structure and Credit Enhancement
6.1 Capital Structure Summary
This section should be presented by Rebecca Tran (Ridgeline Capital Markets LLC). The capital structure is often the most closely scrutinized aspect of an ABS transaction, and presenters should be prepared to discuss it thoroughly.
The total issuance of rated notes is $500,000,000, backed by an initial receivables pool with a principal balance of $612,000,000. The notes are divided into three classes, plus an unrated overcollateralization / retained interest position, as follows:
The overcollateralization of $112,000,000 (representing the difference between the initial pool balance of $612,000,000 and the total note issuance of $500,000,000) provides additional protection for all tranches. The $15,000,000 retained interest represents the first-loss position and is retained by QIH as sponsor.
Talking Point: "The capital structure provides robust credit enhancement at every level: 25% for the triple-A Class A notes, 10% for the single-A Class B notes, and 3% for the triple-B Class C notes. The overcollateralization between the pool balance and the total note issuance provides an additional margin of safety."
6.2 Credit Enhancement Detail
Credit enhancement for each tranche is calculated as the sum of all subordinate tranches and the overcollateralization position:
These credit enhancement levels were determined through a collaborative process involving the rating agencies — Brindoval Ratings (Andrew Petrosian, lead analyst) and Pinnacle Rating Services (Monica Sung, lead analyst) — based on stress scenarios applied to QPF's historical loss and delinquency data. The stress scenarios incorporate severe recession assumptions, elevated default rates, reduced recovery rates, and extended recovery timelines.
Talking Point: "Credit enhancement of 25% on the senior tranche provides substantial protection — representing nearly 60 times the three-year average net loss rate of 0.42%. The enhancement levels have been stress-tested by both rating agencies under severe economic scenarios and have been found sufficient to support the preliminary ratings assigned."
6.3 Risk Retention
In compliance with Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the implementing risk retention rules adopted thereunder, QIH, as sponsor of the securitization, will retain an eligible horizontal residual interest of not less than 5% of the fair value of all ABS interests issued in the transaction. This retention requirement will be satisfied through a combination of the $15,000,000 overcollateralization / retained interest position (representing 3.0% of the total ABS interests) and additional retained exposure sufficient to meet the 5% threshold as measured at closing.
The retained interest represents the first-loss position in the transaction. By retaining this interest, QIH bears the first dollar of credit losses on the receivables pool, ensuring that the sponsor's economic interests are directly aligned with those of the investors.
Talking Point: "Quorum's retained interest aligns the sponsor's economic incentives with those of the noteholders. Under Dodd-Frank, the sponsor is required to hold at least 5% of the transaction's fair value, and QIH's retention exceeds that threshold. This means that QIH takes the first loss before any noteholder is impacted."
6.4 Liquidity Facility
A $25,000,000 liquidity facility has been provided by Northvane Bank, N.A. to support the transaction's cash flow mechanics. The key terms of the facility are as follows:
It is important to note — and presenters should make this clear to investors if the topic arises — that the liquidity facility is designed solely to address potential timing mismatches between the receipt of collections on the receivables and the scheduled payment dates on the notes. The facility is NOT intended to cover credit losses. Draws on the facility must be repaid from subsequent collections, and the facility ranks senior to all notes in the payment waterfall.
Talking Point: "The Northvane liquidity facility is sized to address potential timing mismatches and provides an additional layer of structural protection. It is important to note that this facility covers timing risk, not credit risk — credit risk is addressed through the subordination structure and the overcollateralization."
Section 7: Structural Protections and Early Amortization
7.1 Revolving and Amortization Periods
The transaction features two distinct periods:
Revolving Period (24 Months from Closing). During the revolving period, collections on the receivables pool are used to purchase new eligible receivables from QPF, maintaining the overall pool balance at or near the initial level. This revolving feature allows the transaction to maintain a consistent pool composition and to provide investors with a predictable note duration, while also accommodating the short-term nature of premium finance receivables (which have a weighted average remaining term of only 5.7 months). During the revolving period, all receivables added to the pool must satisfy the eligibility criteria and concentration limits set forth in the transaction documents (see Section 7.4 below).
Amortization Period (12 Months Following End of Revolving Period). Upon the expiration of the revolving period (or upon the occurrence of an early amortization event, as described in Section 7.3 below), the transaction enters the amortization period. During this period, collections are no longer used to purchase new receivables. Instead, collections are applied sequentially to pay down the outstanding notes in order of seniority, in accordance with the payment waterfall described in Section 7.2 below.
Legal Final Maturity. The legal final maturity date for all classes of notes is 42 months from the closing date, providing a 6-month tail period beyond the end of the scheduled amortization period to allow for the collection of any remaining receivables.
7.2 Payment Waterfall (Sequential)
The payment waterfall operates on a strict sequential (senior-to-junior) basis. On each monthly payment date, available funds (consisting of collections on the receivables and any draws on the liquidity facility) are distributed in the following order of priority:
1. Trustee fees and expenses of Calvoneth Trust Company, N.A.
2. Servicing fee payable to QPF (1.00% per annum on outstanding pool balance)
3. Class A interest
4. Class B interest
5. Class C interest
6. Class A principal (until paid in full)
7. Class B principal (until paid in full)
8. Class C principal (until paid in full)
9. Replenishment of overcollateralization to target level
10. Residual to Issuer (retained by sponsor)
Talking Point: "The strict sequential waterfall ensures that senior noteholders are paid in full before any principal is distributed to subordinate tranches. Interest on all classes is paid before any principal, and the trustee fees and servicing fee are paid at the top of the waterfall to ensure the continued operation of the transaction."
During the revolving period, principal collections are not distributed to noteholders but are instead used to purchase additional eligible receivables. The sequential principal payment priorities apply only during the amortization period (whether scheduled or triggered by an early amortization event).
7.3 Early Amortization Triggers
The transaction includes a set of early amortization triggers that are designed to protect noteholders by terminating the revolving period and commencing accelerated note paydown in the event that the performance of the receivables pool or the servicer deteriorates beyond predefined thresholds. The early amortization events are as follows:
• Loss Rate Trigger: The 3-month average net loss rate exceeds 2.00%.
• Delinquency Trigger: The 60+ day delinquency rate exceeds 3.50%.
• Available Funds Cap Deficit: An available funds cap deficit persists for 2 consecutive payment periods.
• Servicer Default or Downgrade: A servicer default event occurs, or the servicer's credit rating is downgraded below BB(cr) (Brindoval) or Ba2(p) (Pinnacle).
• Pool Balance Trigger: The pool balance falls below the minimum required level of $450,000,000 during the revolving period.
Upon the occurrence of any early amortization event, the revolving period immediately terminates, and all collections are applied to pay down the notes in accordance with the sequential payment waterfall. This mechanism ensures that the pool stops adding new receivables and begins to run off, directing all cash flows to the noteholders.
Talking Point: "These triggers are calibrated to historical performance — the loss trigger of 2% is nearly five times the historical average, and the delinquency trigger of 3.5% is approximately four times the current delinquency rate — so they provide meaningful protection while not being so sensitive as to trigger inadvertently. They are designed to intervene before credit deterioration reaches a level that would threaten noteholders' principal."
Note to Presenters: When discussing triggers, reference the Offering Memorandum. Do NOT speculate about the probability of trigger events occurring. If an investor asks about the likelihood of a trigger event, the appropriate response is: "The triggers are calibrated based on historical data and rating agency stress scenarios. We refer you to the Offering Memorandum for the complete description of each trigger and the consequences of a trigger event."
7.4 Eligible Receivables Criteria
Receivables must satisfy all of the following criteria to be included in the pool, both at origination and during the revolving period when new receivables are added:
(i) Originated by QPF in the ordinary course of its premium finance lending business;
(ii) Denominated in U.S. dollars;
(iii) Secured by unearned premium refund rights on the underlying insurance policy;
(iv) Original term does not exceed 12 months;
(v) The obligor is a U.S. commercial policyholder (not a consumer or retail borrower);
(vi) Not in default — specifically, no payment is more than 60 days past due as of the date of inclusion;
(vii) Compliant with all applicable federal and state usury and licensing laws.
In addition to the individual loan-level eligibility criteria, the following concentration limits apply to the pool during the revolving period:
• Single obligor: no more than 0.75% of the pool balance;
• Single state: no more than 20% of the pool balance;
• Single insurance carrier: no more than 15% of the pool balance.
These concentration limits are tested at the time each new receivable is added to the pool and are designed to maintain the granularity and diversification that are key credit strengths of the transaction.
7.5 Events of Default
The Indenture (execution draft version 4, dated October 12, 2022) contains a comprehensive list of events of default, which include, among others:
• Failure to pay interest on any class of notes when due;
• Failure to pay principal on any class of notes at legal final maturity;
• Breach of any representation, warranty, or covenant by the Issuer or the servicer that is not cured within the applicable cure period;
• Bankruptcy, insolvency, or receivership of the Issuer;
• Other customary events of default for asset-backed securities transactions.
Presenters should refer investors to the Indenture and the Offering Memorandum for the complete list of events of default and the remedies available to the indenture trustee and the noteholders upon the occurrence of an event of default.
Section 8: Ratings