Embed Size (px)
Citation preview
The Insurance Institute of London Insurance Requirements of UK Funders Madeleine Clark – 24 February 2016
osborneclarke.com
1
Introduction
• Brief introduction
• Who is the session aimed at?
• Key learning objectives: By the end of this lecture members would have gained an insight into: ‒ What lenders insurance requirements entail
‒ What is being requested in a broker's letter and why
‒ What's important to a lender and how to successfully negotiate a broker's letter
osborneclarke.com
2
Setting the scene on a real estate financing
Insurer
Funder's insurance requirements: • Property is insured for full
reinstatement value • Three years loss of rent cover • Full list of insured risks • Terrorism cover
Broker's perspective: • Demand to issue broker's letter • Additional risk for broker re-
confirmations • On-going obligations on broker • Funder becomes co-insured with
additional complications • No opportunity to charge (seen
as part and parcel of broker's role) Property
Borrower (Insured)
Broker Insurance policy
Broker's letter Funder
Facility agreement (Insurance requirements)
osborneclarke.com
3
Insurance requirements
• The Loan Market Association ("LMA") – facility agreement sets out standard insurance requirements
• As well as key requirements, funders are looking for: ‒ Waiver of subrogation rights
‒ Non-invalidation clause
‒ Confirmation of composite insured
• Investment vs. development
osborneclarke.com
4
Broker's letters
• Why does a UK funder need a broker's letter? − What is usually in them?
− Confirmation that the policy in place conforms to the facility wording
− Confirmation that the premium has been paid and insurance is on cover
− Non-disclosure?
• LMA form of broker's letter
osborneclarke.com
5
Key discussion points
• Co-insured/composite insured vs. multiple/joint insured
• Subrogation rights waiver against the funder and any tenant
• No obligation to disclose by the funder
• Statements of opinion vs. fact
• Liability caps
osborneclarke.com
6
Conclusions
• Matter of negotiation
• Yet to be seen whether the LMA letter will help
• If disagreement, go with confirmation from the insurer
• Don't forget notice of assignment to insurer also needs to be negotiated
osborneclarke.com
7
osborneclarke.com
7
Profile
Madeleine heads up the Real Estate Finance team at Osborne Clarke and specialises in all types of real estate finance work, including development and investment financings on both a syndicated and bilateral basis. Her clients include the UK clearing banks and a number of German banks, BAWAG PSK, various debt funds including ICG Longbow and Tyndaris, a number of mezzanine lenders, servicers, special servicers, funds, developers and a large number of corporate borrowers.
Madeleine's experience includes advising on all types of borrowing structures including limited partnerships, offshore entities, limited liability partnerships, joint venture arrangements and property unit trusts. She is recommended in Legal 500 for real estate finance and is named as a notable practitioner in Chambers 2015. She has been recognised in the directories for having "very good overall experience in the sector", "knowing all the various complicated and offshore structures that our deals often involve", and for being "very personable".
Madeleine Clark Partner T: +44 20 7105 7388
osborneclarke.com
8
osborneclarke.com
8
Our banking and finance practice
Every deal and finance structure is unique to any transaction. Our team of finance lawyers provide a specialist service for banks, lenders, businesses and sponsors and can advise across the range of finance options, from debt financing to equity fundraisings and crowdfunding. We advise major public companies, sponsors and private companies alike, providing commercial debt advice that goes far beyond legal documents.
With a wide breadth of experience we can give both borrowers and lenders an advantage when it comes to making and implementing important financing decisions.
Our wide experience and close working relationships between our finance, corporate and restructuring teams mean we are well placed to advise clients on all aspects of corporate lending and debt restructuring.
We advise banks, funds, other financial institutions and corporate groups, representing both lenders and borrowers across a broad spectrum of borrowing and restructuring issues.
Our clients include:
• The Royal Bank of Scotland
• HSBC
• Barclays Bank
• Investec
• Silicon Valley Bank
• NIBC Bank
• Santander
• Clydesdale Bank
• Topland Group
• Foresight Group
• Funding Circle
• Lloyds Banking Group
osborneclarke.com
9
Osborne Clarke Law Firm of the Year 2015
"The firm has in recent years cemented a position as one of the UK’s most upwardly mobile law firms." Legal Business on why OC became its Law Firm of the Year 2015
"It would be hard to find another firm with the same momentum as Osborne Clarke at the moment." The Lawyer on why OC became its Law Firm of the Year 2015
osborneclarke.com
10
Learning objectives re-cap
• By the end of this lecture members would have gained an insight into: ‒ What lenders insurance requirements entail
‒ What is being requested in a broker's letter and why
‒ What's important to a lender and how to successfully negotiate a broker's letter
Paste end slide graphics over this grey box in slide deck
End slide
Osborne Clarke is the business name for an international legal practice and its associated businesses. Full details here: osborneclarke.com/definitions
