Captive Umbrella Solution for a $100M Asphalt Paving Company
- Industry: Asphalt Paving & Infrastructure
- Location: New York City
- Annual Revenue: $100 million
- Captive Coverages: Umbrella: Auto Liability/General Liability
- Captive Premium: $2,000,000
Challenges
Our client, a leading NYC asphalt paving company, has been a member of a best-in-class group captive for their auto liability, general liability, and workers’ compensation programs for the past three years.
While these captive placements had delivered strong results, their umbrella liability coverage remained in the traditional insurance market. The company was paying over $2 million annually for their umbrella policy—despite having zero claims during the same period.
The result? A substantial underwriting profit was being left in the hands of the carrier instead of being retained by the client.
Union Risk’s Solution
Union Risk recognized the lost profit potential and designed a separate single-cell captive program exclusively for the client’s umbrella coverage.
Key elements of the solution:
- Single-cell captive structure to isolate umbrella liability risk
- Direct ownership and control over underwriting profits and claims management.
- Conservative loss projections based on historical claim-free experience.
Results
By moving the umbrella policy into the captive, the client now stands to retain 50% of their $2 million annual premium as underwriting profit—an expected $1 million per year back to the company.
3-Year Projected Impact:
- ✔ Underwriting Profit Retained: ~$3 million
- ✔ Greater Control: Full oversight on claims handling and policy terms.
- ✔ Improved Cash Flow: Surplus accumulation in the captive for reinvestment or future loss funding.
Conclusion
This case illustrates how even best-in-class companies in a group captive can unlock additional profitability by strategically moving other lines—such as umbrella liability—into a captive structure. For this client, the shift from the traditional market to a single-cell captive meant transforming a recurring expense into a profitable, controlled asset.
We work closely with our clients' tax, financial, and legal teams to evaluate the information within their portfolio and ensure that any planning concepts are seamlessly integrated into their overall financial landscape.