When the University of California decided to stop renting its insurance and start owning it, it named the company after its own motto. Fiat Lux, "let there be light," is the phrase on the University of California seal, and Fiat Lux Risk and Insurance Company is the captive insurer the university built in 2012 to insure itself (UC Office of the President; DISB). Fourteen years later it holds about $2.57 billion in assets and collects roughly $807 million a year in premiums from UC's own campuses and hospitals. Every dollar of underwriting profit and investment income that a commercial insurer would have kept now stays inside the university. This series has spent months finding the same quiet fact underneath foundations and hospitals and pension funds, that the institution which holds the money is an investor first. Fiat Lux is what it looks like when a public university reads that lesson and acts on it deliberately.
What it is
A captive is an insurance company owned by the thing it insures. Fiat Lux is UC's, described in the Regents' own materials as "the University's captive insurance company" and by the Office of the President as "the cornerstone of UC's captive insurance platform" (UC Regents; UCOP). It was formed in 2012, receiving its certificate of authority on September 28 of that year, as a pure single-parent captive organized as a nonprofit, a 501(c)(3) that consolidates into the university's own audited books as what accountants call a "blended component unit" (UC Regents, March 2023; ProPublica; UC audited statements, Note 20).
The one surprising fact of its geography is that it is not a California company. UC domiciled Fiat Lux in Washington, DC, and regulated it through the District's Department of Insurance, Securities and Banking, for the plain reason that "California law does not authorize the formation of a captive" (UC Regents, March 2023). The largest public university system in the country runs its insurer out of the District of Columbia because its home state will not let it own one. Fiat Lux is the flagship of a small fleet UC has since built around it, including the Eureka cell captives and a reciprocal group for its health enterprise, but Fiat Lux is the core (UCOP).
Who was behind it
The concept came out of UC's Office of Risk Services, and three people carry most of the credit. Grace Crickette was UC's Chief Risk Officer when Fiat Lux was formed, having joined in 2004, and the university's own newsletter called her "the driving force behind UC risk management," crediting her initiatives with roughly $493 million in savings (UCOP profile; UC Link). Cheryl Lloyd, a later Chief Risk Officer, is the one UC's own biography credits as having "founded and served as president of Fiat Lux" (UCOP bio). And Courtney Claflin, who came aboard as executive director of captive programs in 2015, is described as the architect who scaled it, growing it from a handful of coverage lines into the enterprise it became (CICA; ICCIE). The current Chief Risk Officer, Kevin Confetti, serves as its president today (UCOP). Over all of it sits the Board of Regents, which owns the captive and oversees it through its finance committee. The fair way to say it is that Fiat Lux was an Office of Risk Services creation, formed under Crickette, credited to Lloyd, and scaled by Claflin.
The concept: keep the float
Why a university builds its own insurer is the interesting part, and UC has said so plainly in board documents. The first reason is the one this series keeps circling: the float. When you pay a commercial insurer a premium, the insurer holds your money between the day you pay it and the day a claim is settled, and it invests that money in the meantime and keeps the earnings. UC decided to keep them itself. Fiat Lux, the Regents wrote, "allows UC the ability to capture underwriting profits and corresponding investment income that would normally be retained by traditional insurance companies by becoming a risk-bearing insurer itself" (UC Regents, September 2017). Stated even more directly, the deductibles and retentions "are now financed through the captive which allows investment earnings on the money until it is paid out" (UC Regents, January 2018). Self-insuring, the board noted, "permits the University to reduce costs by eliminating the insurance companies' profit margin" (UC Regents, January 2021).
The other reasons stack on top. A captive lets UC treat its many campuses and medical centers "as a portfolio versus individual siloed risks" and smooth their premiums, so a single institution is not whipsawed by the wild swings of the commercial insurance cycle (UC Regents, January 2021). It lets UC buy reinsurance directly, on a wholesale basis, rather than retail through brokers, "which increases UC's capacity and reduces its expense" (UC Regents, September 2017). It lets the university insure things the commercial market has abandoned or priced out, which is how Fiat Lux came to write a $50 million parametric earthquake policy and cyber coverage that was otherwise hard to place (UC Regents, September 2017). And it gives each campus a reason to manage its own risk, because its premium is driven partly by its own loss history. UC's own tally of the payoff: Fiat Lux is "creating savings or new earnings for UC in excess of $25 million annually" (UC Regents, March 2023).
How it works
Fiat Lux began in 2012 insuring six types of risk with about $25 million of written premium and $60 million of assets. By 2016 it covered 23 lines, and by 2023 it reinsured or participated in more than 40 (UC Regents, September 2017; UC Regents, March 2023). Its flagship coverages are property, general liability, medical professional liability for the university's hospitals, employment practices, auto, cyber, and terrorism (UCOP overview). The three largest self-insured programs it carries are general liability, employment practices, and the professional liability of UC's medical and student health centers, with the university retaining risk from $10 million up to $25 million per claim before reinsurance takes over (UC Regents, January 2021).
The mechanics are a closed loop inside the university. Each campus and medical center pays an actuarially determined premium based on its own loss experience and its exposure, measured in things like employee headcount, fleet size, or number of hospital beds. Those premiums flow to the Office of Risk Services and are ceded to Fiat Lux, which uses the money to pay claims within the retention and to buy reinsurance above it (UC Regents, January 2021; UC Regents, September 2017). And here is the detail that ties Fiat Lux to the rest of this series: its reserves are invested by UC Investments, the same Office of the Chief Investment Officer of the Regents that runs the university's endowment, against a benchmark that is roughly two-thirds bonds and one-third equities and hedge funds (UC Regents, September 2020). The premiums UC's hospitals pay to insure themselves are managed by the same desk, in the same markets, as the money that funds UC's professorships.
The money
The growth of the balance sheet is the clearest measure of what the float is worth. Fiat Lux's figures are unusually well sourced, because its audited numbers in UC's financial statements agree to the dollar with its IRS Form 990 (UC audited statements, Note 20; ProPublica).
| Fiscal year (June 30) | Total assets | Net position | Premium revenue | Net investment income |
|---|---|---|---|---|
| 2014 | $35.1M | $8.4M | $15.3M | n/a |
| 2023 | $1,796.5M | $465.6M | $488.5M | $87.1M |
| 2024 | $2,018.0M | $563.0M | $570.1M | $169.9M |
| 2025 | $2,565.3M | $870.8M | $807.4M | $205.8M |
In eleven years the captive went from a $35 million startup to a $2.57 billion insurer, and in fiscal 2025 alone it took in $807.4 million of premium and earned $205.8 million on its investments (UC audited statements, Note 20). That $205.8 million is the float made visible: investment income the university now keeps that a commercial carrier would otherwise have pocketed. It is worth being precise that Fiat Lux is one piece of a larger self-insurance operation, UC's total self-insured liabilities across all programs were about $2.99 billion at mid-2025, but Fiat Lux is the risk-bearing company at its center (UC audited statements).
Who benefits, and where the money goes
The primary beneficiary is UC itself. The Regents own the captive and are, in the university's own words, "also its principal beneficiary" (UC Regents, September 2017). Because Fiat Lux consolidates into the university, its underwriting margin and its investment income never leave the system; they simply grow UC's net position, which is why the captive's surplus climbed from $276 million to $465 million in a single recent year. UCOP frames the payoff as efficiencies that "can then be repurposed throughout the University system" (UCOP).
The campuses benefit next, and not only through cheaper and steadier premiums. Fiat Lux actually returns money to them. In 2022 it approved a $20 million dividend back to the campuses and medical centers, $13 million to fund a cyber loss-prevention program and $7 million for the university's risk and safety work, and trade press reports it has channeled more than $27 million into UC risk-mitigation grants over two years (UC Regents, March 2023; Captive Review). The insurer pays a dividend to the insured, because they are the same institution.
The most revealing part is where the risk finally goes, because it closes a loop this series has drawn before. Fiat Lux keeps the routine losses and the float, but it cedes the catastrophic tail, the claims above its $10 to $25 million retentions, to reinsurers "primarily in the international market (London and Bermuda)," a panel that includes Swiss Re, Hannover Re, RenaissanceRe, and the Bermuda carriers Liberty, Markel, and Allied World (UC Regents, January 2021). That is the same offshore reinsurance tower this series traced from home-insurance premiums, ending in the low-tax Bermuda market where the world's catastrophe risk pools. UC kept the float and shipped the catastrophe to the same place everyone else does. The commercial primary insurers are the ones cut out: they lost UC's premium and the investment earnings on it, which is precisely the point.
The lesson, made deliberate
Most of the institutions in this series capture the insurance float by accident of structure, a hospital's reserve or a foundation's corpus that happens to sit in the markets. Fiat Lux is the version built on purpose. A public university looked at the arithmetic that makes an insurance company an investor first, decided it would rather be the investor than the customer, and stood up its own carrier to do it, naming the thing after the light in its motto. It now keeps north of $25 million a year that used to leave the building, earns two hundred million a year investing its own premiums through the same office that runs its endowment, and hands some of the surplus back to the campuses that paid it in. The catastrophe still flows to Bermuda, and the routine risk and its float stay in Oakland. Fiat Lux is not an exotic thing once you see the pattern. It is the pattern, adopted with intent by an institution large enough to run its own insurance company and clear-eyed enough to want the float that the industry lives on.
Related reading
- The Runway and the Ruler: the insurance float explained, and the Bermuda reinsurance tower Fiat Lux cedes its catastrophe risk into.
- University Endowments: the UC Investments office that manages both the endowment and the captive's reserves.
- How Nonprofit Hospitals Actually Make Money: the medical centers whose malpractice risk Fiat Lux carries.
- The Working Ledgers: the single market underneath every reserve, including a captive insurer's.
Fact-check notes and sources
- What it is (UC's wholly-owned captive insurer, formed in 2012 with a certificate of authority dated September 28, 2012; a pure single-parent nonprofit captive and 501(c)(3), EIN 46-1828839; domiciled in Washington, DC, because California does not authorize captive formation; consolidated into UC's audited statements as a blended component unit; and "Fiat Lux," meaning "let there be light," being UC's motto): UC Regents January 2021, UC Regents March 2023, UCOP, ProPublica, UC audited statements Note 20, and DISB.
- Who was behind it (the UC Office of Risk Services; Grace Crickette as Chief Risk Officer from 2004 and "driving force behind UC risk management" credited with about $493 million in savings; Cheryl Lloyd credited by UC's own bio as having founded and served as president of Fiat Lux; Courtney Claflin as the executive director from 2015 who scaled it; Kevin Confetti as current president; and the Board of Regents as owner): UCOP profile of Crickette, UC Link, UCOP bio of Lloyd, CICA, ICCIE, and UCOP on Confetti.
- The rationale (capturing underwriting profit and investment income that would otherwise go to commercial insurers; the float earning investment income until claims are paid; eliminating the insurer's profit margin; smoothing premiums across campuses; buying reinsurance wholesale; insuring hard-to-place risks including a $50 million parametric earthquake policy; and the stated savings "in excess of $25 million annually"): UC Regents September 2017, UC Regents January 2018, UC Regents January 2021, and UC Regents March 2023.
- Structure and lines (growth from six lines and about $25 million of premium in 2012 to 23 lines by 2016 and more than 40 by 2023; the flagship coverages; the $10 million to $25 million retentions; premium allocation by each location's loss experience and exposure base; and reserves invested by UC Investments against a roughly two-thirds fixed income benchmark): UC Regents September 2017, UC Regents January 2021, UCOP overview, and UC Regents September 2020 investment report.
- The money (fiscal 2025 total assets $2,565.3 million, net position $870.8 million, premium revenue $807.4 million, and net investment income $205.8 million, with the fiscal 2023 and 2024 figures and the 2014 startup figures as shown; audited UC statements agreeing to the dollar with the IRS Form 990; and UC's total self-insured liabilities of about $2.99 billion at mid-2025): UC audited statements Note 20 and ProPublica.
- Who benefits and where the money goes (UC as the principal beneficiary with margin and investment income consolidated into the university; the 2022 dividend of $20 million back to campuses, $13 million for cyber prevention and $7 million for risk and safety, and more than $27 million in risk-mitigation grants over two years; and reinsurance ceded primarily to the London and Bermuda markets, including Swiss Re, Hannover Re, RenaissanceRe, and the Bermuda carriers Liberty, Markel, and Allied World): UC Regents September 2017, UCOP, UC Regents March 2023, Captive Review, and UC Regents January 2021. The CICA Outstanding Captive Award for 2017: CICA.
This post is informational, not insurance or financial advice. All figures are reproduced from audited filings, UC Board of Regents materials, the IRS Form 990, and the public record. Individuals and institutions are described from the documented public record as nominative fair use, with no affiliation implied.
