Alberici captive profits helped to fund California acquisition

Alberici used profits generated by its captive insurance programme to help fund the acquisition of a California wastewater treatment contractor in 2023, as the construction group increasingly uses the programme for group strategic purposes.

Speaking at the 2026 VCIA annual conference on a session about using captives as enterprise risk management tools, Alberici vice president of risk management Melinda Young (pictured) explained how its captive programme had evolved significantly since being established more than 26 years ago.

In that time the programme has matured from a cost centre to a profit centre supporting wider corporate strategy, including this acquisition.

St Louis-headquartered Alberici, which has around $4.6bn in revenue and 3,500 craft and salaried employees, operates two captives. NC3 is domiciled in Vermont, while MC3 was established in December 2011 in Missouri as a subsidiary of NC3 largely to avoid confusion on where premium taxes are paid. NC3 provides 100% reinsurance to MC3.

The programme was originally established after the company’s workers’ compensation loss experience deteriorated during the 1990s, with Alberici looking to take greater control of claims rather than relying on a third-party insurer.

“Originally, our captive was not set up to be a profit centre. It was set up to be a cost centre,” Young said.

“Prior to our captive formation, our workers’ compensation loss experience had really deteriorated. We self-performed quite a bit of work, and we were at this point where we really wanted to take control of our losses.”

The decision was taken to establish a captive through which Alberici could manage its own losses.

Together the two captives today provide coverage to Alberici’s operating companies, including general liability, auto liability, workers’ compensation and employer’s liability, contractor’s professional and pollution liability, subcontractor default insurance, asbestos liability, a contractor-controlled insurance programme, and medical stop-loss.

Over the years Young said the captive has “really proven to be very beneficial for the organisation,” to the point that it is now a profit centre able to support the wider business.

This includes the California acquisition, with a dividend from the captive helping the Alberici finance the transaction.

“It really has become part of our strategic initiative in support of that, which I really think speaks to just the profitability and the success of the captive,” Young added.

But despite accumulating capital, Alberici has maintained a conservative approach to captive utilisation throughout its existence.

The company generally purchases commercial insurance with high deductibles or self-insured retentions and uses its captive to insure those layers, rather than using the vehicle for significant catastrophic exposures.

It has considered increasing retentions and adding further coverages, including cyber, but has so far concluded that doing so would not make financial sense.

“We like risks that we can quantify and control as opposed to taking on catastrophic risks,” Young said.

“We don’t have any of our excess in our programme, and really for everything we know what our max is going to be.”

The captive has however used its funds to influence operational risk management at Alberici, including through its subcontractor default insurance programme, which has supported the development of a more rigorous subcontractor prequalification process.

“The costs of that programme are supported by the captive, and that really was a fundamental change in how we viewed our subcontractor selection,” she said.

“We have a person on my team that’s dedicated to that, so we go through a really rigorous vetting process, and it’s made the operational teams very attuned to subcontractor selection.”

Alberici now rarely has a subcontractor default, according to Young, which she said “speaks for itself.”

Alberici is now putting greater emphasis on educating operational teams and middle management about the captive and their own role in managing the risks ultimately retained by the organisation.

“We preach to our staff that everybody in the organisation is a risk manager,” she said. “It’s not isolated to my group, and everybody takes accountability and responsibility for it.”

Young highlighted that having a captive that directly contributes to the group’s bottom line does help to incentivise others in the company to take their risk management responsibilities more seriously.

“We’re very fortunate that we get to add to the bottom line of the company,” she said. “When people understand that when the bottom line is better it affects all of us, even at a personal level, because we have profit sharing, we have bonuses, that does have an impact. And when people realise that, they take a little bit more accountability for it.”

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