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Cover Slide
Quorum Receivables Funding 2022-1 LLC
$500,000,000 Insurance Premium Finance Asset-Backed Notes
Presented to: Brindoval Ratings Inc. — Brindoval Engagement No. CR-SF-2022-08812
Lead Analyst: Andrew Petrosian
August 8, 2022
Prepared by Calderwood & Harkness LLP and Ridgeline Capital Markets LLC
CONFIDENTIAL — For Rating Agency Use Only
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Table of Contents
I. Executive Summary
II. Quorum Insurance Holdings Corp. — Sponsor Overview
III. Quorum Premium Finance LLC — Originator & Servicer
IV. Transaction Structure & SPV Framework
V. Capital Structure & Credit Enhancement
VI. Collateral Overview — Receivables Pool Characteristics
VII. Historical Performance & Loss Analysis
VIII. Structural Protections & Early Amortization Triggers
IX. Payment Waterfall
X. Legal Framework & Opinions
XI. Third-Party Participants
XII. Tax Considerations
XIII. Timeline & Next Steps
XIV. Appendix — Detailed Stratification Data
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I. Executive Summary
Issuer: Quorum Receivables Funding 2022-1 LLC — bankruptcy-remote Delaware LLC
Sponsor / Parent: Quorum Insurance Holdings Corp. (NYSE: QIHC) — headquartered in Stamford, CT
Originator / Seller / Servicer: Quorum Premium Finance LLC — wholly owned subsidiary of QIH
Asset Class: Insurance premium finance receivables — short-term loans to U.S. commercial policyholders secured by unearned premium refund rights
Total Issuance: $500,000,000 across three rated tranches plus overcollateralization
Offering Format: Rule 144A / Regulation S private placement
Structuring Agent / Lead Bookrunner: Ridgeline Capital Markets LLC
Indenture Trustee: Calvoneth Trust Company, N.A.
Back-Up Servicer / Liquidity Provider: Northvane Bank, N.A.
Governing Law: New York
Requested Ratings: AAA(cr) / A(cr) / BBB(cr) for Class A / B / C Notes respectively
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II. Quorum Insurance Holdings Corp. — Sponsor Overview
Full Legal Name: Quorum Insurance Holdings Corp. — Incorporated in Delaware; headquartered at 400 Atlantic Street, Suite 2200, Stamford, CT 06901
NYSE-listed: Ticker QIHC
CEO: Marcus Devereaux; CFO: Priya Raghavan; General Counsel: Nolan Whitford; Treasurer: Sandra Ling-Hwang
FY2021 Consolidated Revenue: $3.8 billion
Three Business Segments: P&C insurance distribution, premium finance lending, insurtech SaaS platforms
Unsecured Credit Ratings: Brindoval Ratings — BBB; Pinnacle Rating Services — Baa2
Auditor: Meridian Ledger LLP (PCAOB-registered); Engagement Partner: Robert Falcone
Established premium finance franchise with 50-state origination capabilities
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III. Quorum Premium Finance LLC — Originator & Servicer
Full Legal Name: Quorum Premium Finance LLC — Delaware LLC, wholly owned by QIH
Principal Office: 400 Atlantic Street, Suite 2200, Stamford, CT 06901; Manager: Sandra Ling-Hwang
Originates and services insurance premium finance loans to commercial policyholders across all 50 states
Total Receivables Portfolio: ~$2.1 billion (pre-securitization); Licensed in all 50 states
Collateral Security: All loans secured by unearned premium refund rights from underlying insurance carriers
Average Loan Original Term: 9.2 months; Weighted Average APR: 7.85%
Historical Net Loss Rate (2019–2021 three-year average): 0.42%
60+ Day Delinquency Rate (as of June 30, 2022 cut-off): 0.87%
Robust origination platform with integrated IT systems, delinquency management, collections procedures, and disaster recovery
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IV. Transaction Structure & SPV Framework
Step 1: QPF (Originator/Seller) sells receivables to QRH (Depositor) via Receivables Sale Agreement — true sale
Step 2: QRH transfers receivables to QRF 2022-1 (Issuer) via Receivables Transfer Agreement — true sale / contribution with back-up security interest
Step 3: QRF 2022-1 issues Notes to investors; grants first-priority security interest in all receivables and collections to Calvoneth Trust Company, N.A. (Trustee)
Intermediate SPV — QRH (Quorum Receivables Holding LLC): Delaware LLC; sole member: QPF; Independent Manager: Eleanor M. Vasquez (Fortbridge Corporate Services LLC); DE SOS File No. 7894228
Issuer — QRF 2022-1 (Quorum Receivables Funding 2022-1 LLC): Delaware LLC; sole member: QRH; Independent Manager: Timothy R. Callan (Fortbridge Corporate Services LLC); DE SOS File No. 7894231
Registered Agent for both SPVs: Ashgrove Services Inc., 28 Liberty Street, New York, NY 10005
Both SPVs established as bankruptcy-remote entities with separateness covenants, independent managers, limited purpose restrictions, and non-petition provisions
Non-consolidation opinions to be delivered by Calderwood & Harkness for both QRF 2022-1 and QRH
Fortbridge Corporate Services LLC (1209 Orange Street, Wilmington, DE 19801) provides independent managers
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V. Capital Structure & Credit Enhancement
Class A Notes: $375,000,000 (75.0%) — Requested Rating: AAA(cr) — Credit Enhancement: 25.0% — Coupon Guidance: SOFR + 125 bps
Class B Notes: $75,000,000 (15.0%) — Requested Rating: A(cr) — Credit Enhancement: 10.0% — Coupon Guidance: SOFR + 210 bps
Class C Notes: $35,000,000 (7.0%) — Requested Rating: BBB(cr) — Credit Enhancement: 3.0% — Coupon Guidance: SOFR + 375 bps
Overcollateralization / Retained Interest: $15,000,000 (3.0%) — Unrated — retained by sponsor for Dodd-Frank risk retention compliance
Total CE for Class A: 25.0% = Class B (15.0%) + Class C (7.0%) + OC (3.0%)
Total CE for Class B: 10.0% = Class C (7.0%) + OC (3.0%)
Total CE for Class C: 3.0% = OC (3.0%)
Sequential pay structure — principal payments applied in strict Class A → B → C priority
Risk Retention: QIH retains 5% horizontal interest via the $15M OC / retained interest per Dodd-Frank Section 941
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VI. Collateral Overview — Receivables Pool Characteristics
| Cut-Off Date: June 30, 2022 | Initial Pool Balance: $612,000,000 | |
| Number of Loans: ~82,400 | Average Loan Balance: ~$7,427 | |
| Weighted Average APR: 7.85% | WA Original Term: 9.2 months | WA Remaining Term: 5.7 months |
Asset Type: Insurance premium finance loans to U.S. commercial policyholders
Collateral Security: Unearned premium refund rights from insurance carriers
Largest Single Obligor: 0.38% of pool ($2,325,600)
Geographic Concentration (Top 3): Texas 14.2%, California 11.8%, Florida 9.6% (aggregate 35.6%)
All loans denominated in USD; obligors are U.S. commercial policyholders
No loan in pool with payment more than 60 days past due at cut-off (per eligibility criteria)
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VII. Historical Performance & Loss Analysis
Three-Year Average Net Loss Rate (2019–2021): 0.42%
Loss performance stable across economic cycles including COVID-19 pandemic
60+ Day Delinquency Rate at Cut-Off (June 30, 2022): 0.87%
Loss severity mitigated by unearned premium refund mechanism — upon default, servicer cancels policy and recovers unearned premium directly from carrier
Premium finance loans are self-liquidating: carrier refund provides principal recovery independent of borrower creditworthiness
Short loan duration (9.2-month WA original term) limits exposure period
Granular pool diversification reduces idiosyncratic obligor risk
Stress scenarios: Even at 5x historical losses (2.10%), Class A credit enhancement of 25.0% provides ample coverage
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VIII. Structural Protections & Early Amortization Triggers
Early Amortization Triggers (any one triggers end of revolving period):
• 3-month average net loss rate exceeds 2.00%
• 60+ day delinquency rate exceeds 3.50%
• Available funds cap deficit for 2 consecutive periods
• Servicer default or servicer credit rating downgrade below BB(cr)/Ba2(p)
• Pool balance falls below minimum required of $450,000,000 during revolving period
Concentration Limits (enforced during revolving period): Single obligor ≤ 0.75%
Eligible Receivables Criteria: originated by QPF; USD-denominated; secured by unearned premium refund rights; original term ≤ 12 months; U.S. commercial policyholder obligor; not > 60 days past due; compliant with all applicable laws
Back-up servicer (Northvane Bank, N.A.) on warm standby to assume servicing upon servicer default
$25,000,000 liquidity facility from Northvane Bank to cover timing mismatches
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IX. Payment Waterfall
1. Trustee fees and expenses (Calvoneth Trust Company, N.A.)
2. Servicing fee — 1.00% per annum on outstanding pool balance (~$510,000/month at initial pool balance)
3. Class A Note interest (SOFR + 125 bps guidance)
4. Class B Note interest (SOFR + 210 bps guidance)
5. Class C Note interest (SOFR + 375 bps guidance)
6. Class A Note principal (until paid in full)
7. Class B Note principal (until paid in full)
8. Class C Note principal (until paid in full)
9. Replenish overcollateralization to target ($15,000,000)
10. Residual to Issuer (retained by sponsor)
During Revolving Period: principal collections used to acquire new eligible receivables rather than pay down notes
Upon early amortization or scheduled amortization: principal collections applied to note paydown in sequential order
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X. Legal Framework & Opinions
Issuer's Counsel: Calderwood & Harkness LLP (Douglas Carmichael, Partner; Yuki Nakamura, Lead Associate)
Underwriter's Counsel: Calloway & Brandt LLP (Harrison Collier, Partner)
Trustee's Counsel: Ashfield & Greer LLP (Vivian Sato, Partner)
Legal Opinions to be Delivered at Closing:
• True sale opinions — QPF to QRH and QRH to QRF 2022-1 transfers (Calderwood & Harkness / Sylvia Hartwell)
• Non-consolidation opinions for QRF 2022-1 and QRH (Calderwood & Harkness)
• Enforceability of Indenture and Notes (Calderwood & Harkness)
• UCC Article 9 security interest perfection opinion (Calderwood & Harkness)
• Tax characterization — debt treatment of Notes; QRF 2022-1 as disregarded entity (Calderwood & Harkness / Sylvia Hartwell)
• No registration required — Rule 144A / Reg S exemption (Calderwood & Harkness)
• Delaware LLC valid formation and authorization opinions for QRF 2022-1 and QRH (Calderwood & Harkness)
UCC-1 financing statements to be filed with the Delaware Secretary of State at each transfer level
Receivables characterized as 'payment intangibles' or 'accounts' under UCC Article 9
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XI. Third-Party Participants
Structuring Agent / Lead Bookrunner / Sole Placement Agent: Ridgeline Capital Markets LLC (Julian Weatherstone, Rebecca Tran)
Indenture Trustee / Paying Agent / Calculation Agent / Securities Intermediary / Custodian: Calvoneth Trust Company, N.A. (Gerald K. Fontaine, Senior Trust Officer) — Houston, TX
Back-Up Servicer: Northvane Bank, N.A. (Diane Coletti, Managing Director) — Fee: $50,000/yr
Liquidity Facility Provider: Northvane Bank, N.A. — $25,000,000 commitment; 0.25% p.a. commitment fee; drawn rate SOFR + 150 bps
Independent Manager Provider: Fortbridge Corporate Services LLC — Timothy R. Callan (QRF 2022-1), Eleanor M. Vasquez (QRH)
Auditor: Meridian Ledger LLP (Robert Falcone, Engagement Partner) — agreed-upon procedures letter and comfort letter
Third-Party Verification Agent: Veristead Analytics LLC (Katharine Drummond, Managing Director) — pool stratification and tape reconciliation
Administrator: QIH (administrative duties on behalf of Issuer)
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XII. Tax Considerations
QRF 2022-1 structured as a disregarded entity for U.S. federal income tax purposes — not treated as a separate taxable entity
Notes to be treated as debt for U.S. federal income tax purposes (opinion by Sylvia Hartwell, Calderwood & Harkness)
FATCA Compliance: Notes structured to comply with FATCA withholding requirements; non-U.S. holders subject to standard W-8 documentation
State Tax: QRF 2022-1 and QRH organized to avoid state-level franchise or income tax outside of Delaware
QPF licensed in all 50 states — all receivables originated in compliance with state usury and licensing laws
True sale treatment for federal income tax purposes — transfers of receivables are sales, not secured financings
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XIII. Timeline & Next Steps
June 28, 2022: Engagement opened; Calderwood & Harkness retained
June 30, 2022: Cut-off date for initial receivables pool
July 11–25, 2022: Kick-off call, initial term sheet circulated, structure finalized
August 3, 2022: QRF 2022-1 and QRH formed in Delaware
August 8, 2022: Rating agency presentations (today)
Target: Preliminary ratings from Brindoval within ~2 weeks (by ~August 22, 2022)
September 2022: Final term sheet; first draft transaction documents and Offering Memorandum
October 2022: Near-final documentation; investor roadshow
Target Pricing / Closing: Late October / November 2022
Revolving Period: 24 months from closing
Legal Final Maturity: 42 months from closing
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XIV. Appendix — Detailed Pool Stratification & Key Metrics Summary
Pool Stratification by State: Texas 14.2%, California 11.8%, Florida 9.6%, remaining 47 states 60.4%
Pool Stratification by Insurance Carrier: No single carrier exceeds 15% limit (detailed carrier breakdown available)
Pool Stratification by Remaining Term: WA Remaining Term 5.7 months
Pool Stratification by APR Band: WA APR 7.85%
Pool Stratification by Loan Balance: Average $7,427; median and distribution available
Pool Stratification by Delinquency Status: 60+ day delinquency rate 0.87% at cut-off
| Key Financial Metrics: Initial Pool $612M | ~82,400 Loans | WA APR 7.85% | Historical Net Loss (3-yr avg.) 0.42% | 60+ DQ 0.87% |
| Concentration Metrics: Largest Obligor 0.38% ($2.3M) | Top 10 Obligors 2.14% ($13.1M) | All limits satisfied |
Verification: Veristead Analytics LLC has independently reconciled pool data and stratification tables
Contact for Additional Data: Yuki Nakamura (Calderwood & Harkness) / Rebecca Tran (Ridgeline)