Ferrari (NYSE:RACE): Insuring These Classic & Vintage Sports and Racing Cars
$RACE, $AIG, $CB
- AIG’s goal: insure all of 39 of the Ferrari 250 GTO’s
Ferrari (NYSE:RACE) built 39 250 GTOs in the early 1960’s, selling them to select buyers for about $18,000 a copy.
Today, the racer is the most expensive and collectible car in the world.
A 1962 Ferrari 250 GTO fetched more than $38-M at a Bonham’s auction in Carmel, CA, in Y 2014, a record public sale for a car, and at least other is said to have been sold privately for more than $50-M.
“Talk about an exclusive club,” says Ronald Fiamma, global head of private collections for AIG’s private client group. “Each one has a unique history, each one has been raced—some by famous racers, some by gentleman racers, and they drive them just as hard as they drive any car. It’s exhilarating to watch,” he says.
That’s quite a statement from a Top executive at a major insurance company, who would be right to prefer the multimillion-dollar cars be safely locked in their garages.
Still, AIG insures 18 of these prized cars, which are still driven on the road.
The most serious collectors who insure with AIG pay an annual premium for all their insurance needs totaling at least $250,000.
The average client who falls into this segment has 9 homes, $20-M in fine art, $5-M in jewelry, a boat, plane or both, a wine collection, and perhaps a garage full of vintage automobiles, all requiring bespoke levels of service.
Of AIG’s 85,000 clients worldwide, 650 have insurance portfolios on this level, while another 400 get comparable risk management support “because of who they are,” Mr. Fiamma says. While he will not reveal names or specifics, Mr. Fiamma says these are often high-profile “Titans of Industry” or celebrities.
If you have a lot of collectible cars, it pays to go with a comprehensive insurer like AIG (NYSE:AIG), or competitors like Chubb (NYSE:CB), or Pure rather than a specialty collectible-car insurer like Hagerty or Leland-West, says Steve Linden, a classic-car consultant.
A comprehensive insurer likely will make a client whole if an accident reduces value. If a $10-M Ferrari drops to $8-M in value after an accident, an insurer like AIG will write a $2-M check to the owner, he says. A specialty-car insurer may not.
Of course, accidents can/do happen.
A Ferrari owner who prefers anonymity recalls driving his silver Ferrari 250 GT SWB on a rough road during a rally in the Western US, when another racer sprayed gravel over his $12-M coupe. “The next thing I know, my car looked like it had measles,” he recalls.
The owner who bought the car years ago for “hundreds of thousands of dollars”filed a claim. Mr. Fiamma “insisted on painting the entire car.” The $40,000 refinish restored the car to its full value.
Mr. Fiamma tells the story of another Ferrari owner who made a spectacular mess of his Ferrari Enzo, one of 400 supercars built from 2002 to about 2004.
No one was hurt, but the car’s fiberglass chassis was shattered.
AIG was ready to write a check for the $950,000 value of the car. But the client said, “I don’t need the money. I want the car. Just see what you can do,” he recalls.
The insurer contacted Ferrari’s factory restoration department.
With the original vehicle identification number stamped on the engine and body, and plates still intact, Mr. Fiamma was told to sweep what was left of the car into a container and send it to Maranello for the factory rebuild.
The cost of shipping, rebuilding the car using the original blueprints, and flying the owner out to see it 2X was about $600,000.
“It would have been easier for us to write the check for $950,000,” Mr. Fiamma says. But, he adds, for this client, making him “whole” meant “making sure he got to keep the car.”
Mr. Fiamma and AIG has no qualms about taking on more collectors. In fact, his goal is to insure the 21 Ferrari 250 GTOs he does not already cover, and he even teases, “Someday, we’ll have them all.”
Editor’s Note: A previous version of the story incorrectly refers to AIG’s “Platinum” policies.
|NYSE:RACE||147.77||18 June 2018||-1.13||146.45||148.32||146.29||274,430|
|HeffX-LTN Analysis for RACE:||Overall||Short||Intermediate||Long|
|Very Bullish (0.50)||Bullish (0.44)||Bullish (0.49)||Very Bullish (0.58)|
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