Our Structured Finance team deals with a range of cover for a number of financial risks. We are a recognised market leader in providing advice and arranging cover in respect of a wide range of financial risks.

Our Structured Finance team acts for some of the world's leading international banks, financial institutions and lessors on insurance solutions for a variety of structured finance transactions involving financial risk.

As well as ship finance, we arrange insurance cover for the financing (including leasing) of aircraft and helicopters (both military and commercial), offshore energy installations, containers, the leasing of other capital goods and sales and purchases of lease portfolios.

In particular, we have extensive experience in arranging cover for Ship Mortgage Indemnity (SMI) and Residual Value Insurance (RVI) on behalf of financial institutions.

Ship Mortgage Indemnity (SMI)
Ship Mortgage Indemnity (SMI) indemnifies the bank or lessor, following default under a loan agreement, against a financial loss that might occur if, following foreclosure of a loan, the sale proceeds are insufficient to repay the outstanding debt.

SMI reduces an insured’s credit and asset risk.  Whilst SMI is normally flexible, it usually covers 65% to 85% Loan to Value Ratio (LVR). SMI indemnifies the bank in the event of the failure of the borrower to repay the loan.

Residual Value Insurance (RVI)
Residual Value Insurance (RVI) indemnifies an Insured (usually a bank or lessor) against a loss that might occur if the sale proceeds of a properly maintained vessel or other asset are less than the vessel’s insured residual value at one specific point in time. This is normally on maturity or break of a lease, or when a balloon payment is due.

Under a typical RVI Policy the cause of loss is the unexpected decline in value, due to changes in market conditions. Pure RVI is not to be confused with a guarantee of the creditworthiness or performance of a borrower or lessee during a loan or lease period. Sometimes Residual Value Insurance can be better understood by considering it as ‘re-sale insurance’. For more information about this product please see Library Publication section which has download of our article published in Lloyd’s List.