Captive of the Week: Midtown Insurance Co. (A New York Times Company)
This 6 minute video tells the story of the most profitable insurance company you’ve never heard of and how its shareholder has kept it that way.
The New York Times Company incorporated Midtown Insurance Company within months after the Terrorism Risk Insurance Act becoming law. It uses this captive to shift nearly $1 billion in terrorism risk (including from nuclear, biological, chemical and radiological attacks) to the federal Terrorism Risk Insurance Program.
If the New York Times suffered a full loss under its terrorism insurance policy, churches, school districts, small businesses and other commercial policyholders would be liable for up to $1.3 billion in policyholder surcharges to cover Midtown’s claim against the program.
The New York Times has actively supported the Terrorism Risk Insurance Act through its reporting but has never disclosed its stake in the program. In one instance, The Times permitted Midtown’s regulator to contribute an op ed calling for Congress to make the program permanent — without disclosing The Times’ billion-dollar interest in the program or that this contributor regulates a New York Times subsidiary.
Although some its most senior New York Times executives sat on the board of directors of Midtown Insurance Company, a regulatory culture of secrecy around captive insurance companies kept newsroom staff (and New York Times readers) in the dark.
It is time to end secrecy for captives used to shift billions in risk from their corporate parents through the Terrorism Risk Insurance Program and onto the balance sheets of America’s small businesses, nonprofits and local governments.