Page 3 - Specialty Practices - April Newsletter

…Standing in the Hall of Fame!

NOE client Real Estate investor/lender

For Chris Riley with HUB Financial Services, his and his group’s main area of
focus is Financial Institutions. According to Chris, however, Financial Institutions
as a practice encompasses more than banks and credit unions. Now investment
funds, investment firms, banks, credit unions, non-bank lenders such as
mortgage finance companies, auto dealers making loans, and in the case of this
success story – a multifamily lender - all fall into the ‘Financial Institutions’
umbrella.

Chris found his way into HUB via US Risk during the financial crisis to bring up the program
groups – creating underwriting authority with specific carriers, mainly Lloyds. “In the case of
Mortgage Impairment there are few domestic options,” says Chris, necessitating program
relationships with E&S markets.
Chris’s specialized knowledge of the US and global financial insurance landscape was
required when HUB Financial Services was brought in by HUB Northeast on one of the larger
HUB International Relationships– This Client is one of the world’s leading and most trusted
commercial real estate advisory firms with over 4,600 professionals and 120 offices
across the U.S. and a recognized industry leader in conventional and unconventional
multifamily financing. The Northeast Service team on the account were Roslyn
Spiegel and Wendy Pennello.
This particular client likely presents one of the most complex mortgage impairment
account nationally, and according to Chris, there aren’t many brokers in the country
who could have written this coverage in a manner that truly helped the client. Since the
coverage is so complex disclosure of possible coverages is entirely predicated on thoroughly
understanding the clients lending operations, the secondary mortgage market operations, the
relevant state and federal lending regulations and the insurance options.
This client issues billions of dollars of loans annually with many of them packaged and sold to
secondary market investors. Given the clients use of third party funds to make and then
close loans there was concern about losses to the collateral and consequently to the loans in
the short and long term. This policy structure attempts to mitigate these losses while also
contemplating “black swan” types risks like large scale flooding and earthquakes.
The challenge for this client and other financial institutions is that significant market
tightening is occurring at a tremendous pace. Given the lack of alternative markets globally,
and the integral part Mortgage Impairment plays in global finance it is not enough
to write a policy, the insured must also briefed on how to protect this policy
from unnecessary losses. These policies contemplate “worst case scenarios”
and as we all know there is no limit to what COULD happen. This, coupled with
the complex interactions from all stakeholders required a large amount of risk
analysis (including geographic dispersion analysis and maximum probable loss
analysis) and client education. Because of this complexity and the client’s requirement that
the policy be woven into existing risk management stacks and their current operating process
there were many Friday night ‘what if’ phone calls from the client, and Roz and Wendy did a
great job navigating all of it with Chris’s team and ultimately jointly presenting the winning
solution.
Ultimately, this win means low to mid six figure revenue to HUB, and they are locked in on a
three-year deal. It is a significant benefit for the insured considering the hard market.

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