Shepherd Binds Builder’s Risk on a $229M VA Conversion with JMB

The client and the project

The insured is a significant adaptive-reuse redevelopment in Virginia, taking a commercial office building and repositioning it into a multi-family residential community. With a $229M project value and 15-month build term, the placement had to cover the full spectrum of property perils during construction, the existing structure, and the financial impact of construction delays through Soft Costs and Loss of Rents.

Adaptive reuse is one of the more demanding risk profiles in the Builder's Risk market. Unlike ground-up construction, conversions require underwriters to assess layered exposures: existing structural conditions, evolving construction sequencing, and a risk profile that shifts as the building transitions from one occupancy class to another.

The placement challenge

Two things made this unique. First, the asset class. Office-to-residential conversion carries exposures most markets aren't built to underwrite. Coverage defaults to two boxes: new ground-up construction, or a stabilized operational property already in service. A conversion is neither. You're changing occupancy on a building that could be occupied or partially occupied while the renovation happens. The real exposure falls into the gap between those two product types, and most carriers don't have an appetite built for it, so clean terms are hard to find on either side. The underwriting requires a market that understands how the risk profile changes from month to month inside the build.

Second, the capacity structure. At $229M of project value, the placement sits in quota share territory. A lot of markets in the Builder's Risk space will not participate in quota share at all. For the broker, that narrows the eligible market significantly before any conversation about price or terms.

How the broker brought it together

Kim Goldstein at JMB Insurance brought the submission to Shepherd. This was the first placement between Shepherd and JMB, so the relationship was being built at the same time the placement was being underwritten.

Shepherd engaged quickly. The underwriting team worked directly with Goldstein to develop a thorough understanding of the project scope: the construction phasing, the sequencing, and the specific risk characteristics inherent to a conversion. The fact that Shepherd has partners that would participate on a quota share basis on a complex adaptive-reuse project was, by itself, a meaningful starting position; the speed and quality of the underwriting work made the placement viable.

What Shepherd did on this placement

Shepherd’s indication was returned back to JMB rapidly. On an adaptive-reuse placement where many markets will not sit at the table at all because of the QS structure, that pace gave the broker real options to work with.

Shepherd participated on the Project-Specific Builder's Risk on a quota share basis, writing All Risk Builder's Risk coverage including catastrophe perils, Soft Costs, Loss of Rents, and the existing building. The team demonstrated understanding of conversion risk that goes beyond a vertical-construction default.

The outcome

A complex office-to-residential conversion got bound on comprehensive Builder's Risk terms including the existing structure, the full CAT slate, Soft Costs, and Loss of Rents. JMB's first placement with Shepherd is on the books, and the execution sets the foundation for future complex placements between the two teams.

"The team at Shepherd is amazing to work with. We enjoy the breadth and depth of the coverage, their technology platform and as a result the speed in which they work which allows us to provide better service to our clients."

Kim Goldstein, President, JMB Insurance