Will Justify race again? Equine insurance makes it pricey

Beyond entry fees, trainer dues and vet bills, there’s a major cost incurred by connections should they continue to campaign a horse like Triple Crown winner Justify, whose breeding rights, according to ESPN, skyrocketed to $75 million in value with his Belmont Stakes win.
Following news this week that Justify is out of serious training due to swelling in one of his ankles, Horse Racing Nation learned that the unbeaten colt is insured by multiple carriers, though it’s not known the amount to which the policies add up.
Matthew Delehanty, an analyst for the Louisville, Ky.-based Lavin Insurance, said each company has a limit when it comes to insuring a single animal. But by combining plans, “a number like $75 million is not only achievable,” he said, “but readily available.”
Delehanty said standard premiums run between 4 and 7 percent per year. For $75 million, that’s a range of $3 million to $5.25 million. Consider that the winner’s share of purses in two races Justify could reasonably compete in — the Travers Stakes and Breeders’ Cup Classic — combine to $3.97 million.

 RELATED: The latest on Justify from trainer Bob Baffert
The sporting decision to continue running Justify could potentially result in taking a loss, depending on how much insurance is purchased.

“Everyone’s got their own risk tolerance,” said Michael Levy, president of Lexington, Ky.-based Muirfield Insurance. “The random analogy I usually give: If you bought a painting because you liked it, and the artist became famous, and your painting went exponentially up in value, would you increase the insurance on it hanging on your wall?”
Kathy Sedlak, a division vice president for Great American Insurance Group, added that, “It’s up to the owner or owners of a horse how they proceed in assessing risk.”
Sedlak said insurance policies on racehorses are “predominantly” mortality policies, not medical insurance. A claim could be made in the event of an injury that results in a horse’s death, but not for an ailment that merely prevents him or her from racing again.

In the case of a horse like Justify, connections could also purchase coverage that covers an incident preventing him from becoming a stallion. Delehanty, the Louisville-based expert, pointed to 2006 Kentucky Derby winner Barbaro as an example.
“If the laminitis had not killed him, he would have been a potential permanent infertility claim because he’s incapable of servicing mares as the result of an accident which he suffered during the policy period,” Delehanty said.
The death of Dubai Millennium, the multiple Group 1 winner who lost a brief bout with grass sickness in 2001, is said to have resulted in the largest insurance claim for a racehorse. His owner, Sheikh Mohammed, had a policy of about £30 million.
ESPN and the New York Times reported before the Belmont that Coolmore, which stood Justify’s sire, the late Scat Daddy, is the party interested in paying a record fee for his breeding rights. The cited value increased $15 million with the Triple Crown sweep.
Elliott Walden, president and CEO of managing partner WinStar Farm, declined comment the day of the Belmont on those reports.
The 2015 Triple Crown winner, American Pharoah, now stands at Coolmore’s Ashford Stud in Kentucky but also shuttles for the Southern Hemisphere’s breeding season in Australia. A similar plan could easily make Justify worth the purchase price.
Owner Zayat Stables’ deal with Coolmore was signed before the Belmont and included kickers through the colt’s 3-year-old season for winning races such as the Breeders’ Cup Classic. Delehanty, however, argued that as an unbeaten colt, Justify’s “value will never be higher than about a minute after he crossed the finish line at the Belmont. That’s why they retire them so quickly."
Delehanty added: “Is Justify’s value going to go up because he wins the Haskell or wins the Travers? Or is his value sort of already set?
“Insurance doesn’t really play a role in whether someone should race the horse or not. In my eyes — and this is unrelated to insurance — how does the stallion’s value get impacted if he races, say, not as well?”
Jack Wolf’s Starlight Racing bought into both Justify and the eventual third-place Kentucky Derby finisher Audible before they both were Grade 1 winners. Wolf said he has no knowledge of insurance as it relates to Justify’s breeding career. But he indicated Starlight does have a separate policy in place covering its racing share of the Triple Crown winner.
China Horse Club and SF Bloodstock stand to benefit along with WinStar — which runs its own stallion operation — should a sale of breeding rights go through to Coolmore. From there, said Levy, with Lexington’s Muirfield, it would be up to the “stallion syndicate manager” to insure Justify. Separate policies can cover a first-year stud in the event he’s congenitally infertile.
Justify’s trainer, Bob Baffert, on Wednesday told Horse Racing Nation the colt will remain with him in California and be re-evaluated for the swelling in two weeks. Of course, Justify went from flashy debut to Triple Crown winner in a span of just 112 days, in the process becoming the second horse ever to win the Derby without racing at age 2.
“But you know their value when they do something like he did in the breeding shed is a lot,” Baffert said. “You know, the value, and the cost of insurance to keep going. It’s a lot of pressure, but you know, he’s done a lot. I mean, what more could he do?”


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