A multi-billion dollar Real Estate Investment Trust (REIT) was completing a $300,000,000 Commercial Mortgage-Backed Security (CMBS) transaction. However, the rating agencies required earthquake coverage far in excess of the client's limits, which would have cost the client more than $1,000,000 in additional premium - a potential deal breaker for both parties.

Marsh and the client negotiated with the rating agency to accept an Earthquake Probable Maximum Loss (PML) analysis using a shorter return period and a less conservative confidence level. By doing so, the PML on the CMBS subject assets was greatly reduced, while still meeting industry standards. Thus, the requirement for additional earthquake limits was retracted by the rating agency and the client completed the CMBS transaction without spending an additional $1,000,000.

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