Telephone: +44 (0)207 488 3055

Telephone: +44 (0)207 488 3055

Residual Value Insurance

In the past few years, the demand for Residual Value Insurance (RVI) has been exponential. The reduction in traditional funding has led to a huge demand for alternative solutions to debt financing for big ticket assets and has fuelled the use of operating leases, finance leases and the need for investment from private equity partners. These structures often require a level of RVI from lessors unwilling or unable to take asset risk, and from investors wishing to limit their downside. Contrary to the demand, the underwriting market for RVI is limited, with only a handful of RVI providers prepared to offer terms on a highly selective basis.
In terms of underwriting, each RVI provider has preferences for asset types and levels of risk. For example, some insurers will only write RVI on Boeing and Airbus aircraft, whereas others will consider most aircraft types including helicopters, regional jets, turbo props etc. Some will underwrite RVI on commercial real estate whilst it is on the exclusion list for other insurers. A bank may be comfortable providing RVI on corporate jets whereas they would be on the declinature list for certain RVI insurers.

We have access to reliable capacity with rated international insurers for multiple lines of business.

By purchasing an RVI policy, a ship-owner or aircraft owner can make significant cash flow savings on mortgage or loan repayments.

Why will this help and how does it work?

Improve cashflow with reduced payments

Provide certainty for lenders and asset-owners

Make previously uneconomic transactions viable

RVI provides an insured value at the end of a finance period. Capital repayments on the insured proportion of the loan can be deferred until the end of the loan period which results in significantly reduced cash outflows during the potentially difficult first years of asset ownership. At the end of the initial loan period, the asset owner has the option to pay off the remaining debt from their own resources, refinance the debt, or sell the asset (vessel or aircraft) to repay the loan.

For all enquiries, please contact us at:
broker@lmisbroker.co.uk