Stories of Success
USA Risk Group offers the experience, independence, creativity, and worldwide resources to meet any coverage need. Our alternative risk solutions are custom designed to provide each client with innovative, affordable coverage while improving their cash flow and reducing expenses. Among recent examples:
USA Risk Group created a Risk Retention Group for a large automotive concern, allowing them to eliminate the filing issues and collateral requirements they were facing with their traditional program. This resulted in direct savings in excess of $500,000 annually and a three year LOC reduction in excess of $15m due to the elimination of deductible collateral
An employee-owned shipping company insured packages at a rate of $0.25 per $100 of value. It accomplished this by establishing an insurance company in Bermuda that issued stock to the employees, and by establishing reinsurance through a third-party insurer.
The insurance company’s premium volume grew to exceed $200 million while the loss ratio averaged 30 percent. Within six years, the company’s net worth exceeded $1 billion. When the employees reached age 55, they cashed in their stock and most retired as millionaires.
From Problem to Profits
Removal of gas and oil deposits caused the land surrounding a gas distribution company to subside. This fractured the gas line couplings to customers’ homes, filling the emptied spaces with explosive gas. The resulting explosions obliterated the homes and their occupants.
The company responded with an aggressive loss prevention campaign to reengineer the couplings. Because insurance was unavailable in the commercial market, the company established a Bermuda captive to write the risk by funding the first $1 million of aggregate exposure. As a result, the company was able to buy an excess policy.
With the loss prevention campaign in operation, the company suffered no losses for seven years. This enabled the captive to accumulate over $10 million in cash. The company increased its limits and supplied additional limits for the parent’s other lines of coverage.
A Growing Success
The members of a produce growers association faced labor disputes and strikes by their farm workers, threatening the loss of crops and the possibility of bankruptcy. Thus, the association established a Bermuda captive that would reimburse the farmers if a strike prevented harvesting. Due to the large number of association members, the diversity of their products, and their geographical distribution, premiums were sufficient to pay for losses.
Management of the captive was especially challenging. Administrators had to track the details of the crop type, size, and location of each farm in order to charge every member an appropriate premium. In addition, the captive, which was established prior to the introduction of the personal computer, had to develop a computer program that would track premiums and losses.
The captive was extremely successful. It remains in operation today, although its focus has changed dramatically to serve the current needs of its members.