Article

This vertically integrated, Miami-based real estate company specializing in the acquisition, development, and management of multifamily and single-family rental communities. Founded in 1996 the company has owned and operated over 30,000 multifamily units valued at more than $5 billion across the United States. Their current portfolio includes more than 12,000 multifamily units in eight states, with a total valuation exceeding $2.9 billion and over $1.1 billion in equity under management.

Captive Insurance Solution Provided

• Policy Structure: C.I. structured and placed a primary $1 million per occurrence / $2 million aggregate General Liability (GL) policy.
• Captive Retention: C.I. provided reinsurance at $500k per occurrence, limiting the captive’s exposure while still issuing a primary $1m/$2m GL Policy
• Carrier Paper: The policy was issued on A- AM Best, IX rated surplus lines paper, ensuring lender acceptance and compliance with financing requirements.
• Deductible Structure: Deductibles were set at levels acceptable to lenders, balancing risk retention with financial prudence.
• Premium Flow: Approximately $1.9m in gross written premium (GWP) is retained by the captive annually(after reinsurance costs), representing a significant portion of the total premium and maximizing retention of underwriting profit.

Key Features and Strategic Benefits

1. Enhanced Control and Customization

• The captive reinsures the fronting carrier, allowing the company to participate directly in claims management, and risk mitigation strategies tailored to their unique portfolio and loss history.
• By using a captive, the insured has the flexibility to adjust coverage terms and risk appetite as their business evolves, rather than being limited by rigid commercial market offerings.

2. Financial Impact

• Captive retention of >$1.9m GWP annually enables the captive to keep 100% of underwriting profit on the reinsured portion, directly reducing their net total cost of risk.
• Surplus generated in the captive can be invested over time, providing an additional income stream and supporting long-term financial resilience.

3. Lender and Regulatory Compliance

• Policies are issued on highly rated surplus lines paper, ensuring compliance with lender requirements and facilitating continued access to project financing.
• The use of a fronting carrier ensures regulatory compliance across jurisdictions and allows the captive to issue certificates of insurance as required by third parties.

4. Risk Management and Claims Control

• This captive structure empowers the company to influence claims handling, including the ability to select counsel and manage litigation, which can lead to lower claim costs and improved outcomes.
• The captive’s direct involvement in risk management encourages a proactive approach to loss prevention and safety, further reducing claims frequency and severity.

5. Long-Term Strategic Advantages

• As the captive accumulates surplus from profitable underwriting years, the captive can distribute dividends back to ownership, reinvest in business operations, or expand coverage to additional lines as their needs grow.
• The captive structure provides a buffer against insurance market volatility, reducing exposure to sudden premium increases or coverage restrictions in the commercial market.

Feature	Details
Policy Limit	$1 million per occurrence / $2 million aggregate
Captive Retention	$500k Per Occurrence
Carrier Paper	A- AM Best, IX surplus lines
Captive Premium Retention	~$2.2m GWP
Lender Acceptance	Yes, with compliant deductible structure
Key Benefits	Underwriting profit retention, claims control, investment income, surplus growth
Regulatory Compliance	Achieved via fronting carrier and surplus lines paper
Strategic Impact	Lower total cost of risk, improved risk management, financial resilience

By partnering with Captives Insure, this client successfully implemented a captive insurance solution that delivers superior control, transparency, and financial benefit compared to traditional insurance. The program not only meets lender and regulatory requirements but also positions them to maximize underwriting profit, invest surplus, and strengthen long-term business resilience.