Willis North America, a unit of Willis Group Holdings, the global insurance broker, announced today that it has formed a Distressed Assets Practice to advise clients on managing the risks associated with financially distressed, foreclosed or abandoned properties and to provide a range of insurance solutions.
The new unit will be headed by Brian Ruane, national real estate and hotel practice leader for Willis. It will bring together resources and expertise from Willis’ real Estate and hotel, construction, environmental, executive risks, financial services and mergers & acquisitions practices and its loan protector unit to serve the unique risk management needs of all industry players. These include property owners, developers, investors, lenders, receivers, special servicers and others active in the distressed assets space.
Ruane was tapped to head the new practice because of his extensive experience working with real estate clients contending with or seeking growth opportunities in distressed assets. Ruane, a 25-year Willis veteran, established Willis’ Real Estate and Hotel Practice in 2005 and it has since become one of the broker’s largest industry practice areas.
According to industry reports, an estimated $1.4 trillion in commercial real estate loans will need to be refinanced between now and 2014. Of those, about 60 percent are “under water,” where the loan exceeds the value of the asset. The real estate market collapse has seen commercial property values plummet 42 percent nationally since 2007. There is now $245 billion of distressed commercial assets in the U.S., up 40 percent in the last year alone. On the residential front, things are similarly troubled, with a record high 10 percent of all mortgagors having missed at least one payment. Many of these assets will be moved to financial institutions during the foreclosure process, and some will become Real Estate Owned (REO), others sold, and others will become the responsibility of receivers and special servicers.
“The burst real estate bubble has created an avalanche of distressed assets today that only seems to be growing. In this challenging environment, there is a great need for sound, objective risk management advice and specialized expertise,” said Don Bailey, Chairman and CEO of Willis North America.
The Willis Distressed Assets Practice coordinates specialist capabilities from across Willis’ practice areas to structure insurance programs that respond to a range of risk management and insurance issues related to distressed assets. Major areas of focus include Property, Liability and Environmental insurance; Forced Placed coverage; insurance for Real Estate Owned assets; Professional Liability insurance and Construction insurance for incomplete projects.