How UConn saved nearly $3 million on postseason bonuses for Dan Hurley, Geno Auriemma and staffs (Mike Anthony)

[huskymedic]

Assisted access <<

 

[History Geek]

This blows my mind a little

 

[Tyler2Rings]

"You better get us take an insurance policy out on us now"

 

[ctbro1999]

A revised, or altogether new, contract for Hurley is currently in the early negotiation phase and expected to be finalized in the coming months.

Lock him in for the rest of his (college) coaching days!

 

[aburks41]

That’s the first time I’ve ever heard of something like this. That insurance company will probably never do business with us again lmao

 

[king conn]

Yeah if I am an insurance co. and DB is calling it's going straight to VM

 

[OkaForPrez]

"Insurance Co" Takes Field Future Bet.

 

[Storrs South]

Like Jontay Porter, UConn bet on itself

 

[UConn3432]

Incredible

 

[StllH8L8ner]

Did the insurance company influence our bracket to try to thwart another title?

 

[mets1090]

Lol this is kind of psychotic, but I'll take it. I wonder what kind of blend of achievements each team had to hit for this policy to be roughly a break even move.

Now turn around and incorporate that $3 million in savings into new contracts for the staff.

 

[WhereistheDove?]

This blows my mind a little

If there is a desire for an organization to de-risk, someone will step in and create a business looking to take on that risk. Gotta assume if we’re doing it, a lot of big programs are and it’s probably a decent business.

 

[polycom]

I bet they do this yearly and we only heard about it this year. Insurance companies aren't silly they wouldn't write a policy like this in a vacuum.

 

[Uconn77Duke74]

I bet the insurance agent was from either North Carolina or Kentucky.

 

[Scottzer]

I get that it worked out, but $2.8 mil for a policy with a cap of $6.25 mil is insane. Figure a policy like this is typically a specialty thing like Lloyds of London. I’m really curious what the expected loss ratio was on this (health insurance is typically around 80-85 percent, certain life insurance policies are around 50-60 percent, etc - how much of the premium is expected to be paid out in claims).
This looks like it had a number of basic bonuses that would be paid fairly frequently - maybe $1.5 million or so - and then the roulette wheel strikes for the big stuff.

Now, policies like this are often underwritten with a stop loss. So the insurance carrier self-insures for a certain amount - say up to $2 million, and they buy reinsurance to cover the rest.

 

[aburks41]

Did the insurance company influence our bracket to try to thwart another title?

View attachment 99959

#TheCONNspiracy

 

[Jim]

Geno has been to 15 of the last 16 Final Fours. Dan has won it all in the last two. It is going to get harder and harder to find insurance companies that don't know Storrs is the Basketball Capital of the World.

 

[CL82]

Did the insurance company influence our bracket to try to thwart another title?

View attachment 99959

Probably reached out to the company that was flying us to Arizona and pointed out how that extra charter flight might impact their future premiums unless it was delayed for a bit.

 

[UConniki]

Geno has been to 15 of the last 16 Final Fours. Dan has won it all in the last two. It is going to get harder and harder to find insurance companies that don't know Storrs is the Basketball Capital of the World.

You forgot to mention that while “Storrs is the basketball capital of the world Hartford is the insurance capital of the country / world “.

 

[bigknight3]

Nice work! But they couldn't include the cost of the final four/championship pregame parties so we weren't charge $75 for each event?!

(They probably included the costs of the party and still charged us anyways!)

 

[upstater]

That’s the first time I’ve ever heard of something like this. That insurance company will probably never do business with us again lmao

All the insurance needs to do is play both sides. Take the money from Vegas by betting on UConn.

 

[Umami Zen]

Smart business by DB.. Find an outlet who can package the risk within the reinsurance market for a reasonable investment(cost) to the client.

 

[Scottzer]

Geno has been to 15 of the last 16 Final Fours. Dan has won it all in the last two. It is going to get harder and harder to find insurance companies that don't know Storrs is the Basketball Capital of the World.

Insurance companies operate much like a casino. they shouldn’t cancel because you won, they want you to keep playing and paying - to a point.

 

[The Yakk]

That’s the first time I’ve ever heard of something like this. That insurance company will probably never do business with us again lmao

Lol but nah, we could buy this policy again if we wanted it.

I don't know the details of UConn's deal, but I have been involved in this business on the insurance side and can add a little more color.

1. The company mentioned in the article--"Game Point Capital"--is not the actual risk-taker. They are a specialist agent who arranges the coverage, but there is a real insurance company with a big balance sheet behind them who takes the risk. Someone like AIG or Berkshire Hathaway, or maybe a Lloyds syndicate. Game Point Capital will continue to try to sell this policy to UConn; if the actual insurer gets gun shy because UConn is too good, then Game Point will find someone else.

2. The insurer who wrote this policy did not insure UConn alone. They are in the sports/promotions business, and likely have dozens of similar deals with other teams. Most of those will be loss-free. It is a niche insurance business, but incredibly profitable. More on this below.

3. You might ask, how is an insurance company allowed to get involved in sports futures betting? Technically they cannot; the key is there is an insurable interest that the insurer is protecting. In UConn's case, it's the coaches' bonuses; more commonly, it's some kind of marketing promotion. Like, Filene's in Boston gives everyone their money back for their TV if the Sox win the World Series. So technically they are insuring something, but their pricing analysis is exactly the same as if they were booking a futures bet.

4. Since the deal is mathematically identical to placing a futures bet (or a series of futures bets in UConn's case), you might ask--why did UConn not just go to a sports book and get a better price? Two reasons: 1) the size of the bet; sports books are not in the habit of taking one-off exposures in the $millions; and 2) credit exposure to the counterparty. Insurance companies pay claims in the $millions all the time; sports books are a bigger credit risk.

5. Because of this advantage, the insurer can price these deals with a much bigger profit component. Essentially, the "vig" for the insurance company is massive. It's very profitable business in general.

One would hope that UConn is not buying coverage like this as a matter of routine. It's nice that we were able to exploit the insurance this year--and that DB is able to brag about the results--but he is bragging about a pretty dumb financial decision. The way these deals are priced, it is a losing proposition for UConn.

 

[AllHusky]

Amazing thread, fascinating and funny. Pure Boneyard Entertainment!!