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Navigating the impact of a sale lease-back strategy for insureds in the retail space

By Peter Locher and Shaina Ferris | September 18, 2023

Sale lease-back strategies are often an approach that insureds in the retail space pursue for a variety of reasons.

Sale lease-back strategies are often an approach that insureds in the retail space pursue for a variety of reasons. We outline below some of the important ways sale lease-back strategies impact insurance programs that risk managers should keep in mind.


Program structure: One of the most common issues those insureds pursuing sale lease-back strategies encounter are issues with new landlords not accepting certificates showing a high deductible or a Self-Insured Retention (SIR). Prior to executing a sale lease-back strategy, it will be important to discuss the nature of the program structure in place and seek the landlord’s acceptance of a certificate prior to the sale of the location.

Some landlords will not accept a deductible or SIR structure; a sale lease-back strategy may warrant the issuance of location-specific policies to satisfy landlord requirements. To the extent possible, it is important for the insured’s risk management team to be aware of these requirements and have time to properly negotiate any new program requirements with their insurer.

Coverage: While pursuing a sale lease-back strategy, an insured’s risk management team should be engaged in discussions with future landlords to make sure that the policy conforms to the landlord's requirements from a coverage perspective.

Landlords often require specific additional insured language as well as other policy terms. Risk managers should be actively engaged in reviews of leases to make sure that the policy language conforms to the terms of the lease. If manuscript wording is required, it is best to approach an incumbent insurer as early as possibly to have ample time to negotiate the inclusion of new policy language.

Credit impact: Another important program implication for insureds to be aware of is the impact of a sale lease-back strategy on an insured’s perceived financial condition by a carrier’s credit department.

Insurance company credit officers often view these strategies with skepticism; seeing it as a way for an organization to generate cash in lieu of achieving organic business growth. It is important for insureds to work with their broker partners to help articulate why a particular sale lease-back strategy is being pursued. To the extent an insured can demonstrate that the effort will not only generate a cash infusion from the sale of properties, but also help margin growth by continuing to operate those properties under more financially advantageous terms, the more likely a credit officer is to appreciate the strategy and view it as a positive for an insured’s financial future. Separately, WTW’s proprietary Financial Analytic Insights tool can help craft an effective narrative around key financial metrics often overlooked by credit officers.


Total insured values: A sale lease-back strategy can have a significant impact on an insured’s property program. When pursuing a sale lease-back strategy, it is important for an insured to engage their risk management team and review the lease requirements around who is responsible for providing insurance for any given location.

An insured’s property schedule and total insured values can be dramatically different once a sale lease-back strategy is executed. Values could be significantly overstated or understated compared to what is contractually required with the new landlord. An insured’s risk management team needs time to review the insurance requirements and adjust their schedules accordingly.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).


Casualty Broking Leader, Retail & Distribution Industry Vertical, WTW
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Property Broking Leader, Retail & Distribution Industry Vertical, WTW
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