Willis Corroon, First Union Corporation To Pilot Environmental Program

The brokerage firm of Willis Corroon Corp. and First Union Corp., the bank holding company, have joined forces to pilot an innovative lenders environmental insurance product to be underwritten by member companies of the American International Group (AIG). The program features a lenders insurance product that will compensate the lender if there is a default on the loan, and if there is an environmental problem associated with the collateral.

Malcolm Griggs, First Union senior vice president for Commercial Credit Policy, said that First Union will become the first major bank to utilize this product in the "regular course of business." The pilot program will be launched this fall in the Carolinas and will be rolled out to all First Union locations during the first quarter of 1999.

Griggs explained that until now, lenders have required Phase I site assessments performed by environmental consultants in connection with loans secured by commercial real estate. If environmental problems occurred, the impact could render the lenders collateral worthless.

"The big difference for us is that we are now able to transfer our environmental risk," continued Griggs, "not just manage it. The big difference for our customers is that the transaction cost to them has been reduced substantially and the turn-around time is two days instead of 3-4 weeks. I think this product will become as accepted as title insurance within the banking industry." Jim Glenn, executive vice president of Willis Corroon Corp. of the Carolinas, said, "We look forward to this partnership and its launch this fall."