Success Story
100% Covenant Testing Coverage Across a Private Placement Portfolio for a US-Based Life Insurer Using CovenAce™
Client Introduction
A US-based life and annuity insurer whose general account holds about 650 private placement and private credit positions.
Problem Statement
The investment team could independently test only its largest positions each quarter. Key challenges included:
- Only ~40% of positions independently tested each quarter
- Issuer-specific covenant definitions and EBITDA adjustments
- Issuer financials arriving in varied formats and schedules
- A ~6-week quarterly testing cycle
- Private credit allocation growing faster than analyst capacity
The insurer needed independent testing across every position without expanding the credit team at the same pace.
Solution Offered
Anaptyss applied the CovenAce™ engine used in commercial lending to the insurer's investment portfolio, extracting covenants from each note purchase agreement and spreading issuer financials under that agreement's own definitions.
Credit analysts reviewed every flag before escalation, with the calculation and source evidence attached.
Key Solution Delivered
- Extracted covenants from ~650 note purchase agreements and amendments
- Spread issuer financials to a standard template
- Applied each agreement's own definitions and adjustments
- Recalculated every financial covenant each quarter
- Compared results with issuer-reported compliance
- Set headroom early-warning thresholds with investment risk
- Analyst review of every flag with source evidence attached
- Portfolio-level headroom and watchlist reporting for committee
Business Outcomes
- Independent covenant testing extended from ~40% to 100% of positions.
- Quarterly testing cycle reduced from ~6 weeks to 8 business days.
- 2 deteriorating credits flagged a quarter before a reported breach.
- Full-portfolio headroom reporting for every investment committee.
Turning Complex Challenges into
Measurable Outcomes
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