LGIS insures the top, or riskiest, 10% to 40% of the loan, which combined with borrower’s equity usually falls below the 50% capitalization target many banks require to forgo a Personal Guarantee. Policies are supported by a subsidiary of a NYSE S&P A-rated insurance company that is also A.M. Best A (Excellent) financial strength rated. Premiums are adjustable. 1.50% – 3.75% of the loan amount, depending upon equity amount, preleasing, property type and other real estate factors, such as sponsorship, markets, etc.

LGIS offers an investment grade rated insurance policy designed to pay claims. Lenders may use this in place of a Personal Guarantee, or as a supplement, to become more competitive in the market. Lenders can offer improved terms due to investment grade credit insurance policy, regulatory capital relief and a vastly improved mechanism for collection.

Borrowers and guarantors are sheltered from personal loss and lenders are insured against loss due to default. Without the threat of personal ruin, sponsors are motivated to focus all their efforts on the success of the project, and by doing so protect investor equity in case of trouble. Besides, investors will hold sponsors “feet to the fire” much more so than any lender and in a more cooperative manner to resolve a problem. This helps remove the adversarial nature of the relationship between lender and borrower and helps establish a mutually beneficial partnership.

As the only true Commercial Property Loan Insurance (CPLI) provider in the industry, LGIS Group’s bank customers realize significant ROI tied to:

• Profitability - CPLI provides an immediate positive impact on profitability by positioning bankers to reduce their required capital reserves, redirecting non-earning assets to support increased CRE lending. Banks can now optimize their portfolios and without netting agreements and improving on the efficiency frontier.
• Risk Mitigation - CPLI represents a structural change to the CRE market, enabling bankers to effectively offload risk from their loan portfolios. In the event of default, LGIS Group helps bankers protect their customer relationships by working collaboratively with both the banker and the borrower/business customer to help negotiate a cooperative solution.
• Operational Efficiency Savings - Adoption of LGIS Group’s CPLI program improves banks’ operational efficiencies by reducing (or eliminating entirely) the traditional, cumbersome borrower credit analysis process, as well as ongoing time- and labor-intensive quarterly updates and confirmation of collateral value and liquidity.
• Customer Relationship Management + Add Deposits - LGIS enables bankers to work more collaboratively with their valued business customers by focusing their attention on the feasibility of the project itself vs. the personal balance sheet of the personal guarantor/borrower(s). This in turn supports cross-selling of additional products and services (like cash management, wealth management, business banking), further strengthening the customer/bank relationship and adding deposits.
• Market Competition - LGIS Group’s CPLI program positions bankers to more readily respond to competitive pressures from new non-bank market entrants, preserving market position for CRE development in their communities. Banks who adopt LGIS Group’s CPLI are better insulated during any point in the full economic cycle, including against the inevitable “End of Cycle” risk as the economy changes over time. Participating banks will be positioned to offer a borrower better rates and potentially more debt dollars, something other banks cannot do without LGIS and thus gain market share against other competing banks. Additionally, banks with LGIS can offer less expensive rates and can immediately regain lost market share significantly.

LGIS Group has a deep understanding of the commercial real estate industry and what is required to make a project successful. Its patented CPLI program was purpose-built by established commercial real estate developers and investors based on decades of proven, first-hand experience within the industry. LGIS Group’s team has more than 250 years of collective insurance, commercial real estate and transactional experience. LGIS Group has a patented process that is backed by an investment-grade rated insurance policy.