2015 Power Broker
Mark Baechle never under promises, but he sure tends to over deliver. Mining client Ambre Energy North America Inc. planned to build its business through a key acquisition — a challenging strategy given the company lacked a strong balance sheet and robust cash flow, which generated uncertainty among bond insurers. Without those bonds, Ambre would have been unable to close its acquisition deal.
Baechle positioned Ambre in front of bond underwriters, discussing the company’s history, the value of the acquisition and the support Ambre had from a major financial partner.
The result: better surety support than Ambre had sought, leading to “a successful acquisition of the target asset,” said Darin Adlard, vice president of finance at Ambre.
“Mark Baechle’s confidence in our business model, his understanding of the business needs, and his willingness to approach the marketplace knowing he could provide the solution we needed gave our company the confidence in him as our broker.”
For a new contractor client, Baechle developed a surety marketing plan featuring the company’s construction team, processes and partner relationships. He also improved the client’s risk management program, contractually shifting more risk to subcontractors.
The resulting surety support far exceeded any that the client previously could procure, allowing it to plan a business expansion.
“Without a quick solution which was to the satisfaction of our surety, we would not have been able to bid certain works,” said an executive for the client.
Danette Beck is a take-charge broker with an eye for unconventional solutions to coverage problems.
One contractor client was expanding into Puerto Rico and asked for an introduction to the local Marsh office. Beck instead led a series of meetings involving the client’s project team, joint venture partner and project owner, as well as local Marsh representatives. The resulting program included an owner-controlled insurance program, professional liability coverage for design flaws, contractors’ pollution liability wrap-up insurance and builder’s risk insurance.
Beck’s quick work allowed the project to begin as scheduled, solidifying the contractor’s relationship with the project owner, the client said.
For another client struggling to attract competing bids for an OCIP, Beck generated competition by allowing insurers to bid on either multiple or single lines of coverage.
A third project-owner client with a rapidly expanding nationwide footprint needed an OCIP that ensured the client would not face delays waiting on insurance when a project had to be executed quickly. The insurer also had to be comfortable with a rapid accumulation of risk and changing deadlines.
Beck negotiated such a program and at a dramatically reduced cost, saving the client millions of dollars.
The coverage gives the client’s busy project team the ability “to focus where they can best add value, rather than worrying about insurance,” the client said.
Producing Big Savings
Juan Cordoba storms through his clients’ weather-peril coverage problems.
Bayview Condominium Management Inc. had seen flood insurance premiums skyrocket for units at a large Miami property.
“Future buyers, as well as existing unit owners applying with financial institutions to refinance, were unable to secure financing through normal channels,” said Bayview President Robert J. Alwine.
Cordoba, assisted by engineers, redesigned areas of the property to mitigate the flood risk. Insurers reduced premiums by $150,000, which was the key to satisfying the buyers’ lenders, Alwine said.
One real estate investment firm depends on Cordoba’s advice on all property transactions. For a $500 million building project in a windstorm-prone area, the client could not find reasonably priced hurricane insurance. Cordoba and his team developed a strategy for the firm to purchase coverage in stages as the project was developed.
“This helped big time to budget properly for the project,” the client said. “The actual cost of the builder’s risk placement was over $2 million less than the amount initially projected.”
Cordoba also helped to revise a flood insurance rating on a newly finished building for KW Property Management and Consulting, saving the client $900,000.
”The process took 60 days and it was key to the financial stability of the project,” said Paul S. Kaplan, KW’s managing director.
Due Diligence, and Then Some
Amy Fedena finds solutions where clients see only problems.
A client that had formed a joint venture to build a large project had not realized the associated $50 million of liability insurance it had to provide was not covered under its corporate program. It therefore hadn’t factored the approximate $250,000 insurance premium into the project’s budget.
In Fedena’s extensive research of all pertinent contracts, she found that the project’s general contractor had purchased insurance and named the client and JV as additional insureds. With this information, she persuaded the client’s corporate program underwriter to cover the project at no additional premium, and then persuaded the JV partner to amend its contract with the client so it wouldn’t have to purchase a stand-alone liability policy.
“She is more than our broker and more than a consultant; we feel she is an extension of our team,” the client said.
Another client, Pennoni Associates Inc., was being excluded from bidding on many lucrative projects because some aberrant claims had ballooned its NCCI and Pennsylvania workers’ comp experience modifier beyond 1.0, which was hurting the entire company.
Fedena addressed Pennoni’s clients’ specific concerns, “analyzing and explaining extenuating circumstances and consideration of other states’ data and our overall operations, and detailing corrective actions,” said Nelson Shaffer, executive vice president and CAO. “This ultimately resulted in acceptance of Pennoni’s bids and award of several large projects.”
Enabling $1 Billion in Business
Michael Heffernan ensures that key stakeholders in his clients’ businesses understand their risk mitigation efforts.
For renewable energy firm EnviroMission Inc., Heffernan “did a tremendous job” of providing solutions to the government agencies responsible for deciding whether to lease the company land where it can erect its solar energy technology, said President Christopher Davey.
“Mike, by providing risk mitigation solutions, allowed a level of comfort to be reached,” Davey said. “This has resulted in our company successfully negotiating a number of land leases. Without Mike’s vision, we would not have projects, as we would not have the land. The dollar value on this is priceless but would be in the $1 billion range.”
At Joseph J. Albanese Inc., the founder, CEO and sole shareholder became seriously ill as the construction company was renewing its general liability, automobile and workers’ compensation coverages. Questions about the company’s succession plan along with some past poor claims experience were at the forefront of underwriters’ minds.
“Mike was able to work with our underwriters, communicating the severity of the situation while retaining their confidence in the company’s succession contingency plan in the event something happened to my father,” said Kevin J. Albanese, who succeeded his father as president and CEO after the elder Albanese passed away.
Heffernan “accomplished the renewal with a very modest adjustment, and supported our company as we transitioned, all the while, protecting the organization’s balance sheet.”
In the Driver’s Seat
Clients turn to Joe Pardue in emergencies for quick and comprehensive aid.
Samet Corp. was building a dormitory for a large university when the structure was destroyed by fire. Pardue had placed the builder’s risk coverage, which provided not only sufficient building limits but also loss of income and expedited expenses for an immediate and accelerated rebuild.
“The night of the fire, Joe was available and jumped on the issue with his team to ensure we had access to the carrier at the right level to speed processing and help answer many questions upfront,” including how quickly the structure could be demolished, said Rick Davenport, Samet’s president of construction. The loss exceeded $10 million.
Pardue organized many calls between the carrier and Samet and personally joined those meetings “as a resource to help ensure we didn’t misstep, as we have never had a fire previously or any type of issue of this magnitude,” Davenport said.
Adams Electric faced an emergency of a different kind. It had won three new large bids and then found that its current surety underwriter would not bond the aggregate value of work. That development also surprised the company’s incumbent surety broker, whom Pardue hadn’t been able to unseat for eight years.
But Operations Manager Don Young turned to Pardue, whom the company was using to place other coverages. Within days, including a weekend, Pardue found a surety that agreed to write a bond covering all three projects.