BACKGROUND: In 2012, on the Thursday before Memorial Day weekend, a large private equity investor engaged RMC. The Client was closing on a portfolio of six hotel locations in various states with more than 50% of the total insurable values located in Florida.
The challenge was twofold: (1) the insurance premiums for the property, casualty, and umbrella coverage were nearly TWICE what had been written on a per door basis; and (2) the loan required the Client to carry a significant amount of Wind and Flood insurance on these assets. Moreover, an insurance broker masquerading as a “consultant” had confirmed that the insurance costs were in line with market rates. The Client’s loan would not close because the bank was concerned that the borrower would not be able to meet its debt service payments under the proposed insurance costs.
Over Memorial Day weekend, RMC used its industry leading leverage, broker competition process, and in-house analytics to lower the programs insurance costs by $649K (42%). The savings were further enhanced by RMC negotiating reduced wind, land and flood sublimit requirements with the lender. The transaction would close on time and with great success. Two years later, when afforded proper time, RMC again used its market forces (the "RMC Process") to further consolidate the portfolio, saving the client an additional $211K (24%) on its property premium. Based on the property premium of this program alone, RMC has added an estimated $13.6M of value to the Client when compared against the pre-RMC program rate.