Barbaro's owners had insurance

May 24, 2006|By JEFF BARKER AND BILL ORDINE | JEFF BARKER AND BILL ORDINE,SUN REPORTERS

When Barbaro broke down during the Preakness Stakes, his owners held insurance to cover them in the event of a catastrophic injury to the horse, which was likely worth at least $25 million to $30 million - and more if he had won.

Owners Roy and Gretchen Jackson had purchased two types of insurance on the prized colt: one for if the Kentucky Derby winner dies, and the other to protect them if he is unable to fulfill his potential as a stud, Roy Jackson said yesterday.

The Jacksons wouldn't say precisely how much the insurance was worth, suggesting any money they might receive would be meaningless compared with the tragedy that befell the horse. "There couldn't be enough money in the world," Gretchen Jackson said.

As Barbaro recuperated from surgery to repair his badly shattered hind leg, insurance wasn't foremost in the minds of the Jacksons or the 3-year-old colt's fans. Their focus was on efforts to save the horse, whose survival and breeding career remained uncertain.

But, in a strictly financial sense, the Jacksons were fortunate in a risky industry to have had the means to afford equine insurance. Industry officials say premiums can run into the hundreds of thousands of dollars and can even top $1 million a year.

It's a price that many horse owners can't afford much as they'd like to in a business in which horses periodically falter.

"It's just not that unusual for a horse to break down," said Lou Raffetto, the Maryland Jockey Club's chief operating officer. "It can be a misstep or something like a hairline crack that never manifests itself."

Race horses are at risk partly because "in a full-out run, everything is on one foot. One leg is touching the ground at a time," said Billy Boniface, president of the Maryland Horse Breeders Association. But despite the dangers, Boniface said, "You couldn't afford to do insurance on every horse. It's just very, very expensive." He said Barbaro would "easily" have been worth $25 million after winning the Derby.

The owners of a top horse such as Barbaro can expect to pay premiums amounting to 4 1/2 to 5 1/2 percent of the horse's value.

"So if you have $10 million in insurance, it's going to cost you in the neighborhood of a half-million dollars a year," said Maryland Thoroughbred Horsemen's Association president Richard Hoffberger, who sells insurance to horse owners.

While such premiums are out of the range of many, Hoffberger said elite horses - such as, for example, the 20 Kentucky Derby entries - are normally covered. "You would think most of them would at least have some mortality insurance. And those with demonstrated breeding potential would have stallion permanent disability [coverage]."

The Jacksons are paying the horse's veterinary bills themselves. And industry officials said the Jacksons' insurance isn't likely to cover the couple for any money that the colt might have been expected to gain from future winnings.

A policy to guard against lost track earnings might exist "but I've never heard of one," said Tom Bowman, a top Maryland horse breeder.

Barbaro's worth skyrocketed after handily winning the Derby on May 6. In that situation, it is common for owners to raise their insurance to cover the horse's new value, said Michael Levy, president of the Muirfield Insurance Agency, a leading equine insurance company based in Lexington, Ky.

"If I see on Saturday that a client's horse has won a big race, then I'm going to call on Monday and say `Congratulations, you've got this horse insured for X and it's obviously worth more, do you want to consider an increase?' " Levy said.

Levy declined to comment on whether his agency was doing business with the Jacksons. Muirfield works with Lloyd's of London, the Great American Insurance Group and other firms to obtain insurance for its clients.

Barbaro might have been worth $40 million had he won the Preakness, but could not likely have been insured for that much, according to industry insiders. "There is not enough worldwide capacity in the markets that write equine insurance to cover $40 million in insurance," Levy said. "The worldwide capacity would be under $30 million unless a non-traditional market decided to participate."

Levy said horse owners can typically collect on policies whether their horses die in an accident or as the result of a third party's negligence. In a negligence case, the carrier will often pay out the policy and then seek to recoup money from the responsible party or their insurer.

Given Barbaro's severe injuries, the Jacksons could probably have had the colt destroyed and collected on their policy.

But they didn't. "I hope there's some knowledge that owners and trainers and jockeys care," Gretchen Jackson said yesterday at a news conference in Pennsylvania, where Barbaro is being cared for. "It's not about money, it's not about limelight, it's more about the horse and the beauty of it and the integrity of it on a lot of levels."

jeff.barker@baltsun.com

bill.ordine@baltsun.com

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