LPH Pitman has a dedicated team of insurance specialists providing manuscripted coverage and insurance advice to banks, lessors, aircraft owners, and traders.

LPH Pitman have been awarded the Queen's Award for Industry as recognition of the creative skills employed to help their clients close transactions with credit, political, residual value or asset risk problems. LPH is the only Lloyd's broker to have been recognised with this award for services to the aerospace leasing market.

LPH can provide banks and lessors with coverage price indications on a same day basis, and has special underwriting facilities which allow for the binding of risks on demand from customers.

The team at LPH has an unequalled knowledge in the application of insurance to financial risks, and through many years of experience in addressing clients' requirements can apply workable solutions to almost all structural, credit, political and asset risk problems. Policy wordings and guarantee agreements are held in the LPH library as are the up to date legal frameworks of almost all countries where equipment has been leased or financed. LPH can direct a client to the legal difficulties and requirements which will be found in these countries even before local counsel has been appointed.

Typical Bank-Lessor coverages include:

Non-repossession and political risk insurance

Covering a Lessor/Lender against the inability to obtain repossession of an aircraft following default by the lessee. LPH has arranged repossession coverage on assets based world-wide, with an aggregate value in excess of US$10billion. Coverage disengages country risk and allows for Transfer Risk qualification under BIS rules.

The coverage underwrites against the adverse interference in the valid repossession of the insured equipment, by the host government or judiciary. Coverage insures against any new law, which may be introduced in the host country during the lease term and accepts those confiscatory laws which may exist at the inception of the lease.

The policy can be extended to address any judicial delay and can be drafted to provide very short waiting periods so that underwriters will pay pure deprivation losses soon after the cause of loss.

Coverage further protects a lessor from the application of United Nations sanctions on the host country of a lessee. Sanctions are used increasingly and their application can create a situation where a lessor is deprived of an aircraft by the actions of the Security Council rather than the host country. LPH were the first broker to obtain coverage at no additional cost for this increasingly evident peril.

Policies can be arranged on a non-cancellable basis for any periods required by the lessor up to 10 years. For more information please contact Jeremy Leggett

Lease payment credit

Provides a financial guarantee-type protection against losses which can result from the financial default of a lessee. Coverage can be provided for a non-cancellable period of up to 5 years and, where a whole-lease portfolio is insured, coverage can be arranged for up to 10 years.

Whole portfolio protection, which provides a combination of deficiency guarantee, lease payment sump fund protection and end of term residual guarantees, can be arranged. These whole account protections are sufficiently robust that the underlying debt funding the aircraft and the leases can be priced at 'AA' margins in the banking market.

For more information please contact Jeremy Leggett.

Deficiency and net realised loss cover

Providing coverage whereby after default by a lessee, and the successful repossession, the value of the asset is realised through a sale. The insurance pays any shortfall created on the sale, being the difference between the outstanding debt owed to the lender and the net amount realised through the sale of the asset.

For more information please contact Jeremy Leggett.

Contingent war and detainment risk insurance

Providing standby War Insurance for aircraft owners and lenders. Airline (lessee) war insurances always give underwriters the right to cancel War Risk coverage after giving seven days' notice to the lessor. If underwriters do issue a notice of cancellation due to a deterioration in the stability of the host country of the lessee, the lessee is contractually obliged to return the aircraft to the lessor, but the lessee might fail to do so because of a commercial dispute, political intervention or because the aircraft is inoperative. In these circumstances, the lessor's aircraft could be stuck on the ground or operated within the war zone without any War Insurance protection. Contingent War Insurance provides non-cancellable war risk insurance for the benefit of the lessor, whilst the waiting period is running on the lessor's Non-Repossession Insurance policy.

The policy also covers against detainment of the aircraft, which is normally outside the scope of the lessee's coverage. It also provides protection for the lessor against the lessee sustaining war damage whilst operating in excluded countries. Coverage is available on a same-day basis and is modestly priced when considered against the adverse eventualities, which can prejudice the collateral of a lessor.

Large airline fleets have certain aggregate restrictions on war claims payments following a major incident. The application of an aggregate limit such as happened to Kuwait Airways where the war losses exceeded the aggregate limit by almost US$500million could mean that a Lessor may have its war claims payment scaled back so that only part of the value of the aircraft is settled. Contingent War policies automatically cover the lessor against any adverse application of an aggregate war limit.'

For more information please contact Antony Esdaile on antony@lphpitman.co.uk or download the Proposal Form (Word .doc) or the Contingent Hull Deductible Proposal Form (Word .doc).

Total loss only and unrealised equity protection

When entering into a lease contract with an airline, the lessee undertakes to insure the Hull value of the aircraft for pre-determined amounts throughout the lease period. These obligations, usually found within the stipulated loss schedule, fix the maximum amount for which the lessee is obliged to insure the aircraft. During the period of the lease the aircraft may increase in value or may be sold to another lessor, with the benefit of the lease attached. These eventualities often create a situation where the aircraft is worth more than the amount of hull coverage that the lessee provides under the lessee's airline insurance programme. In these circumstances LPH can provide a 24 hour turn around on Total Loss only Insurance (TLO) to cover the unrealised equity or value increase which the lessor has built in the aircraft.

TLO can be used to cover any unwind costs and the loss of tax benefits which may result from the destruction of the aircraft.

For more information please contact Antony Esdaile. or download the proposal form (Word .doc).

Trader/lessor/bank hull and liability insurance

When leases expire or are accelerated due to default by the lessee, the owner or financier of the aircraft will be obliged to arrange their own insurance protection. Coverage incepts when the lessee's cover ceases and it addresses the 'any flight risks' during the return, demonstration and re-delivery of the aircraft and any period when the aircraft is parked or in storage. LPH maintains fully underwritten facilities to provide Ground and Flight cover for lessors and banks, which can be incepted at short notice.

For more information please contact Jeremy Leggett

Contingent hull and liability coverage

The best maintained airline insurance programmes can be deficient when a claim is made, and these deficiencies can mean that a bank's protection as the loss payee under the hull coverage does not perform or the liability limits may be insufficient to reconcile the legal liability resulting from a loss incident. Contingent Hull coverage provides protection for a bank or lessor so that even if the lessee's insurance was defective the full value of the aircraft will be paid to the owner.

Contingent Liability provides additional liability protection for the owner/lessor in the event that they are joined in any lawsuit after the lessee's coverage is exhausted or fails. The policy also provides full legal defence cost coverage in favour of the lessor.

Additional protection can be provided under a contingent deductible extension which pays the repair cost of any uninsured damage discovered on the aircraft post-default, which otherwise would have been uninsured due to the application of the deductible retention within the lessee's hull insurance policy. Deducible exposure can reach $1million, and the funding of this type of loss at the time of default can challenge the resources of lessors when their equity is most exposed.

For more information please contact Antony Esdaile or download the Proposal Form (Word .doc) or the Contingent Hull Deductible Proposal Form (Word .doc).

For general discussions and information about any of the special services provided by the financial insurance team at LPH, please contact Jeremy Leggett.

Manufacturer deficiency guarantees

Manufacturers of all types of products can improve their domestic and international sales penetration by offering their own 'Vendor' financing packages. Manufacturers are often best placed to support the financing of their products confidently, and will always have more incentive than conventional lenders in providing speedy and efficient financing and leasing offers on their own products.

Whilst manufacturer may have considerable confidence in the financial performance of customers and residual values of their products, they are unable to provide loans or financial guarantees to banks or Residual 'future value' guarantees on their products, as this would contradict conventional accounting regulations, governing what is a 'True' sale of their manufactured product.

LPH Deficiency Insurance programmes allow a manufacturer to provide corporate support on vendor financing, which permits the sale by the manufacturer to be booked and the profit to be taken on the delivery date. LPH programmes provide 'AA' rated guarantees from major insurers who assume all or a pre-agreed proportion of any net realised loss generated on a financing scheme, thus providing a third-party Financial Guarantee.

These Financial Guarantee programmes are best suited to high value manufactured products such as aircraft, aerospace, ships, capital goods and vehicles, but high volume low cost products can be wrapped to the satisfaction of all national accounting board standards.

For more information please contact Jeremy Leggett.

Sale and leaseback financial guarantee programmes

Where there are long lead times on the delivery of high value manufactured products such as aircraft and ships. Manufacturers can aid the purchase decision of a customer by purchasing the equipment to be phased out and leasing it back until the delivery date of the new manufactured product.

This may entail giving future value support on pre-owned equipment originally manufactured by a competitor, but to win a new order from a competitor's client list demands innovation and positive marketing. LPH Pitman can provide the necessary Financial Guarantees to support both the default and the residual exposure risks for the structuring of a sale and lease back to generate new sales. These programmes can provide full financial disengagement.

For more information please contact Jeremy Leggett.

Manufacturer warranty programs

Manufacturers can enhance the reputation of their products and obtain a significant competitive edge by providing long-term Warranty Guarantees to buyers. These Guarantees protect against the premature failure of a product or against all types of mechanical breakdown. LPH can either disengage any losses that result from the warranty guarantees from the manufacturer's balance sheet, or it can design and implement a manufacturer approved long-term warranty insurance scheme.

For more information please contact broker@lphpitman.co.uk

General financial guarantees

LPH is an innovative arranger of all types of financial guarantees to aid the funding of projects and the sales financing of products. Support can be given on all types of qualifying transactions involving both private and sovereign government buyers.