5-Year Cost Comparison

Ballast Mutual is not designed to produce a much lower Year 1 premium bill. It is designed so that more of the long-term value stays with your company instead of with a commercial carrier.

The figures below are a conservative Independent Account example for a company with $250,000 of Year 1 traditional premium. They are illustrative only and are not a quote or guarantee.

Base case assumptions

• Year 1 traditional premium of $250,000
• About 5% annual premium trend on both sides
• Captive gross premium at 1.00 times traditional (no assumed rate discount)
• 20% Independent Account capital in Year 1
• 45% loss ratio on net retained premium
• 3% investment yield
• Measured dividend payout

How to read this

• Cash out the door is similar under both structures in this conservative case.
• Under traditional insurance, premium is a sunk expense.
• Under Ballast Mutual, residual value can remain in your Independent Account instead of staying with a carrier.
• Year 1 Ballast cash includes about $50,000 of Independent Account capital in addition to premium. That capital is yours, not a fee to Bearing Risk.
• Independent Account equity is not the same as cash available on demand. Exit timing and regulatory requirements still apply.

Important scope limit

This comparison is an Independent Account level view only. It does not fully model dollars moving through the shared Group Account.

Frequent or severe losses in the Group Account can reduce surplus available to all members. That is why Ballast Mutual is selective about who joins. Members should be able to demonstrate operational safeguards and strong risk mitigation.