KBRA releases research on the characteristics and key concepts related to litigation finance ABS, which has seen increasing issuance volume. KBRA has rated 12 litigation finance ABS transactions across six different sponsors since 2020.

KBRA-rated litigation finance ABS transactions are primarily collateralized by advances made to plaintiffs against potential future settlements of cases, primarily relating to personal injury. Certain transactions also include advances made to medical service providers, which are required to be repaid with case proceeds. The pools of advances backing the ABS are characterized by diversification of cases, plaintiffs, law firms, and payors. The ABS structures typically include a pool balance calculation that gives credit to collections above the funded amount as well as full turbo payment priorities.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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