Real Estate Finance Division
Alpha Risk Management has provided extensive support to banks, lenders, private equity funds and pension plans in the review and structuring of insurance for their equity investments, acquisitions and construction financing.
Alpha Risk Management, Inc. studies the risk management aspects of a project to be financed, incorporates the insurance requirements into the loan agreement, then verifies and documents the coverages within a closing package.
Alpha Risk – We are an independent consultant not engaged in the sale of insurance
Over 30 lenders, banks, private equity funds and pension plans have utilized our cutting-edge independent risk management services. We provide services for a wide range of transactions from walk-ups to construction projects that top $1B in financing.
Capitalizing on our extensive work for national and international real estate concerns and formidable accomplishments in due diligence services for mergers and acquisitions we established a protocol in support of financial institutions’ lending activities.
These have evolved to include a broad range of services involved in commercial real estate financing. Transactions involving every type of property are evaluated to see whether they present special risks which, if uncorrected, could impact the financial quality of the loan. Our services are geared towards reducing, controlling, and mitigating risk of loss through careful evaluation of exposures and understanding the borrower’s insurance and risk management program. When necessary, coverages are re-negotiated to broaden and elevate them to acceptable levels for closing.
We will help you establish minimum insurance requirements.
How we Service the Real Estate & Banking Industries:
During the due diligence process we start with a risk management review of the subject property or development plan.
- Meet with you to establish your organization’s tolerance for risk compared with current industry trends.
- Based on our meetings, evaluate your current standards for insurance protection to be provided by your borrowers.
- Then, using information gathered, formulate a comprehensive set of insurance specifications which are designed to afford the lender, through their borrower, maximum insurance protection for both the underlying asset as well as ongoing cash flow for continuity in servicing the debt.
- Include special requirements based upon Standard & Poor’s or other rating organizations for Commercial Mortgage Backed Securities.
- Work toward compliance with your new insurance and risk management requirements.
- Upon request, as part of a rollout, we can conduct a training program for your staff to enhance their knowledge of major insurance and risk management issues for commercial lenders.
Based upon our interaction with your senior management and loan officers we evaluate your minimum insurance standards for borrowers. Utilizing our extensive database updated to reflect current conditions we formulate a comprehensive set of insurance specifications which can be modified to meet your requirements on a loan by loan basis.
Our decades of hands-on experience has enabled Alpha to identify and provide solutions for specific exposure risks:
- Zoning / Rebuilding
- Flood, Storm Surge
- Earth movement, including sink holes
- Contiguous property
- Blocked access
- Loss history
- Net leases
- Contingent coverage
Expanding into construction loans:
- Builders Risk, including soft costs
- Design Error
- Defective materials
- GC/CM liability limits
- Contract provisions with outside professionals
Following our risk management review we propose suitable insurance requirements by line of coverage, including:
- Minimum limits and sublimits
- Maximum deductibles/retentions
- Broad array of protective coverage clauses
- Deletion of exclusions or language diluting coverage
- Insurer ratings and licensing
Once approved by the bank’s counsel these are incorporated into the loan agreement.
From this point on we are usually working with the borrower and/or directly with their insurance broker. Alpha is not a “check-list” firm as we drill deep to ensure that our client is fully protected.
Alpha Risk is not a "Check-list" Firm
We then conduct a review of the borrower’s insurance to ensure inclusion of required coverage enhancements designed to protect both the bank and the borrower’s asset and ongoing cash flow, as well as to determine if appropriate insurable values are in place.
We prepare detailed summaries of insurance, which include the ratings of insurers providing coverage.
We gather insurance certificates, binders and other relevant documentation reflecting coverage levels negotiated as well as showing the lender’s interests as Additional Insured, Mortgagee, and Loss Payee.
Materials are provided to you in a comprehensive closing package documenting the borrower’s insurance program and advising in our cover letter you whether coverage meets or exceeds your institution’s insurance and risk management requirements for each loan.