Gronkowski Now Pitchman for eMaxx, a Reciprocal With a Different Playbook

Rob Gronkowski, the star former pro football player and pitchman for USAA insurance, will now call audibles for eMaxx Assurance Group, a Tampa-headquartered provider of a new type of risk-managed, captive-based commercial insurance.

“The Gronkowski and the McCarthy families have had a relationship for many, many years,” the retired tight end for the New England Patriots and Tampa Bay Buccanners said in a video-call news conference this week.

Gronk, as he’s known, was referring to the family of Brian McCarthy, the CEO of eMaxx, who has ties to New England and Tampa and has supported some of Gronkowski’s charity efforts through the years. Gronkowski will serve as company spokesman, representing eMaxx in brand campaigns, marketing efforts and community initiatives, the company announced.

“Everyone knows me from the USAA commercials, but it was time everyone moved on, and I think this is the best opportunity and, I think, the right opportunity,” Gronkowski said.

Gronk may be better known than the company he’s working for.

EMaxx until 2018 was known as Energi and specialized in liability and property coverage for the energy industry. The firm decided to diversify into insurance for many more business and industry sectors, but with an unusual structure and approach that requires insureds to take extensive risk-abatement measures.

That may mean the use of telematics technology to ensure safety by truck drivers, wind and storm-surge mitigation for buildings in Florida, and vegetation reduction and fire suppression around structures in wildfire-prone areas.

Having seen the costly impact that lawsuits can have on guaranteed-cost insurance firms, McCarthy said getting insureds to share responsibility for losses was key.

“We felt the only way to effectively write commercial auto and general liability was through the members assuming risk in order to get them to implement the risk management that they needed to do,” McCarthy said in a recent interview with Insurance Journal.

He explained the eMaxx playbook: Captive insurers are formed for various industry groups. EMaxx serves as a reciprocal insurance exchange that sits between the captives and a fronting company carrier, which for a recently announced commercial property program is Fortegra, a nationally known specialty insurance carrier.

Fortegra cedes some risk through the reciprocal to the captives. The captives will cover a lower level of losses, while the fronting carrier takes higher loss levels.

“The reciprocal is unusual, where the reciprocal sits in between,” McCarthy said.

But state insurance regulators seem to like having an established carrier on the front end, not just a newly formed captive that may be thinly capitalized, McCarthy said.

Davies, the multinational insurance services and captive management firm, manages the most of the eMaxx captive programs.

McCarthy said his company writes in all 50 U.S. states has plans to grow in coming years. The eMaxx captive program for mid-market energy and energy construction companies, for example, already has 135 member companies with more than $135 million in premium and is now the largest downstream energy captive in the country, he noted.

EMaxx also offers a specialty transport captive program, a crane-rigging company captive, and others.

The firm is well-capitalized, with a $25 million surplus, he noted. It’s backed in part by EJF Capital LP, a $4 billion hedge fund. But McCarthy was quick to say that eMaxx has not solicited and does not plan to seek funding from private equity firms, which have come under increasing criticism in recent years.

“Someday, there’s going to be a big debate on whether private equity has been good for the insurance industry,” he said.

The eMaxx approach has not completely escaped litigation in the last few years. But, at least in federal courts, only a handful of suits are listed. That’s remarkably few for an insurance firm.

In one case that is still pending, Coaction Specialty Management filed suit in federal court in New York last year, asking for $10 million. Coaction said it and its affiliated insurers agreed to serve as fronting carriers for an eMaxx captive known as PC3 that was marketed to preferred vendors of the American Automobile Association. EMaxx failed to attract enough members to join the captive, the suit alleges.

“When PC3 started running out of money, eMaxx failed to take reasonable steps to collect additional collateral from program members,” the plaintiffs argued. “And when Coaction asked eMaxx to fulfill its obligations under the parties’ contracts and as captive manager, eMaxx refused to do so…”

EMaxx has asked the court to dismiss the suit, arguing that it is meritless and misleading. The suit is “nothing more than a breach of contract claim dressed up as a tort,” the motion to dismiss memorandum notes.

A judge in the U.S. District Court in the Southern District of New York has not made a ruling on the motion to dismiss.

Top photo: Gronkowski celebrates a touchdown in 2022. (AP Photo/Jason Behnken, File)