1. AFIC: From Export Credit Gaps to Private Insurance Solutions
Replacing ECA Guarantees with Market-Driven Insurance Support
AFIC was conceived as a direct response to the gap created when U.S. EXIM Bank and other ECAs temporarily withdrew export credit support for Boeing aircraft.
To fill this void, Marsh, together with insurers such as AXIS Capital, Fidelis, Sompo, and Liberty Specialty Markets, created a private-sector alternative that could replicate ECA-style risk protection through insurance-based guarantees.
The Role of ANPI (Aircraft Non-Payment Insurance)
The ANPI policy serves as the backbone of AFIC financing.
If a borrower defaults on its repayment obligations, the insurers jointly guarantee payment to the lenders, ensuring full recovery of the outstanding balance.
This policy is non-cancellable and provides a level of credit enhancement equivalent to a sovereign-backed guarantee—without the bureaucratic complexity of government processes.
AFIC financing has since become a viable and respected funding source for airlines across the world, particularly for Boeing aircraft acquisitions, offering both lenders and borrowers greater predictability and speed.
2. AFIC: Transaction Framework and Legal Architecture
Structuring Aircraft Finance with Bankruptcy-Remote Protection
A typical AFIC transaction mirrors the legal and financial structure of a traditional ECA-backed deal, but with private insurers assuming the guarantee role.
It is often structured as a lease financing transaction, utilizing a special purpose vehicle (SPV) that is bankruptcy-remote to isolate financial risk.
Core Transaction Documents
Key agreements in an AFIC structure include:
- - Loan and Security Agreement – governing repayment and collateral.
- ANPI Policy and Assignment Agreement – granting lenders enforceable rights to claim insurance proceeds.
- Intercreditor Agreements – managing multiple lender rights.
- Aircraft Lease and Purchase Contracts – aligned with manufacturer delivery schedules.
Each document must align with international aviation law, including the Cape Town Convention, to ensure that lenders retain enforceable rights over the aircraft and associated revenues.
Proper legal drafting is essential to avoid enforcement disputes and cross-border inconsistencies in the event of default.
3. AFIC: Why Airlines and Financiers Choose It
Balancing Access, Flexibility, and Risk Mitigation
AFIC offers both airlines and lenders a market-driven, flexible, and scalable financing solution.
By replacing the government-backed guarantee with private insurance, AFIC expands funding options, accelerates approval times, and adapts to varied currencies and jurisdictions.
AFIC vs Traditional ECA Financing
| Category | ECA Financing | AFIC Financing |
|---|---|---|
| Guarantee Provider | Government agency (e.g., EXIM Bank) | Private insurance consortium |
| Approval Speed | Slow, multi-stage review | Fast, commercial timeline |
| Eligibility | Limited to sovereign-linked borrowers | Global, market-based access |
| Structural Flexibility | Restricted by policy frameworks | Highly customizable |
| Risk Allocation | Government-backed | Distributed among insurers |
For financial institutions, AFIC reduces risk exposure through ANPI-backed repayment protection.
For airlines, it offers the ability to negotiate better financing terms and diversify funding beyond traditional ECA programs.
4. AFIC: Legal Risk and Regulatory Compliance
Ensuring Enforceability Across Jurisdictions
Because AFIC replaces government guarantees with private insurance, legal enforceability is paramount.
Each transaction requires careful attention to insurance law, aviation law, and cross-border regulatory compliance to avoid pitfalls in claims or collateral enforcement.
Legal Review Focus Areas
- - Insurance enforceability – Verifying that the ANPI policy is legally valid and non-cancellable.
- Collateral and lien perfection – Ensuring aircraft registration and interests are filed under the Cape Town Convention.
- Tax and withholding issues – Managing cross-border payments and premium taxation.
- Jurisdiction and governing law – Selecting optimal dispute resolution frameworks under New York or English law.
Our aviation finance attorneys conduct in-depth due diligence on both the borrower’s credit profile and the insurers’ financial stability, ensuring every party’s obligations are legally binding and internationally enforceable.
5. AFIC: Integration with Leasing and Capital Markets
Extending AFIC Beyond Traditional Loan Structures
AFIC has evolved beyond simple aircraft loan guarantees to encompass operating leases, sale-and-leaseback transactions, and asset-backed securities (ABS).
By embedding ANPI coverage into capital market products, lenders and investors benefit from improved credit ratings and enhanced liquidity.
AFIC in Securitized Financing
In securitization transactions, AFIC-backed notes are treated as investment-grade due to the insurance protection on underlying cash flows.
Our attorneys advise on policy assignment, reinsurance structures, and direct rights of action, ensuring that investor protections remain intact across multiple layers of the transaction.
This innovative approach has enabled AFIC to integrate into structured finance markets, supporting complex financing strategies for both lessors and institutional investors.
6. AFIC: The Future of Insurance-Backed Aviation Finance
Adapting to ESG, Reinsurance, and Digital Transformation
AFIC continues to evolve alongside global market and regulatory changes.
Insurers, financiers, and manufacturers are now exploring ways to expand AFIC’s application to sustainable aviation investments, engine leasing, and advanced air mobility assets.
Emerging Trends
- - ESG-linked financing – Integrating sustainability performance targets into AFIC loan terms.
- Reinsurance partnerships – Diversifying insurer exposure and expanding capacity.
- Digital documentation and blockchain – Enabling faster claims processing and transaction verification.
- Global regulatory harmonization – Aligning AFIC transactions with Solvency II and Basel III standards.
These developments signal AFIC’s transformation from a niche Boeing solution into a global financing platform applicable across the aviation ecosystem.
7. Why Choose SJKP LLP for AFIC and Aviation Finance Counsel
Legal Precision in a Highly Specialized Market
The AFIC structure requires coordination across multiple legal disciplines: insurance, finance, tax, and aviation regulation.
At SJKP LLP, we provide comprehensive legal support at every stage of the process—policy drafting, financing documentation, regulatory compliance, and dispute resolution.
Our experience spans advising airlines, lessors, lenders, and insurers in transactions involving billions of dollars in aircraft financing.
We help clients navigate complex documentation, align with global regulatory standards, and secure their assets through legally enforceable structures.
AFIC represents the future of aviation finance—a fusion of legal innovation, financial security, and market adaptability—and we stand ready to guide clients through its next phase of evolution.
29 Oct, 2025
