Reinsurance_FAQ

GENERAL FAQs ABOUT OUR REINSURANCE PROGRAM


A: The primary benefit of a sound reinsurance program is that it provides you with the opportunity to realize the underwriting profit and investment income from Finance & Insurance (F&I) products sold to your customers. This additional income source also provides many other benefits, including:

  • Opportunities for additional compensation for key employees
  • Estate planning
  • Long-term wealth accumulation
  • Taxation efficiency

A: For one, we provide efficient, all-inclusive administrative solutions, including:

  • Reinsurance company formation and corporate management
  • Financial statement and tax return preparation
  • Regulatory reporting
  • Policy administration
  • Claims adjudication
  • Program development

Secondly, with our ceding method, premiums are ceded on a written basis, which allows your reinsurance company to realize immediate investment income from its business.

Thirdly, you have buyout control. Our reinsurance company owners may let their company “run off," accept our bid for the company’s assets, or accept a competitive bid from an external party.

Lastly, there are no termination provisions. Our reinsurance company owners retain control of unearned reserves and investment income on their business, even when they stop writing.

A: After much research, we found that the Turks and Caicos Islands (TCI), British West Indies, provides significantly more flexibility than other locations. It is also less expensive to form and maintain an insurance company in TCI than in the United States. Corporate capitalization requirements for U.S. insurance companies are at least $150,000, whereas in TCI, the cost is less than $10,000.

This cost advantage gives an insurance producer the ability to turn incoming funds into lower-taxed insurance dollars for significantly less capital up front. Additional jurisdiction advantages in TCI include a steady economic environment, modern insurance legislation and regulatory oversight, competitive fee structures, and tax exemption status for qualified companies.

Even though your reinsurance company is formed in TCI, it is not considered an “offshore” insurance company. It will be treated as a U.S. corporation by the IRS for federal income tax reporting purposes, per a 953(d) election.

A: No. Premiums are held in a trust account in a U.S. financial institution, namely Fifth Third bank.

A: A non-exclusive list of who may own a reinsurance company would include an individual or individuals, a legitimate corporate entity, a trust or a partnership.
A: Basically anything that can be insured can be reinsured. In addition to automotive dealers, we manage reinsurance accounts for doctors, lawyers, contractors, and many others. In the case of automotive dealers, typical items that are reinsured include most Finance and Insurance (F&I) products, such as vehicle service contracts, aftermarket, GAP and more. The list of what can be reinsured is extensive.

A: We offer both Controlled Foreign Corporations (CFC) and Non-Controlled Foreign Corporations (NCFC). Regardless of which you choose, all of our programs are fully insured.

Benefits of a Controlled Foreign Corporation:
  • Provides the ability to reinsure life and casualty products
  • Minimal capital requirements
  • Reserves are ceded on a “written” basis
Benefits of a Non-Controlled Foreign Corporation:
  • Ideal for larger producing organizations
  • 100% of production and investment income is allocated to the shareholder position
  • Lower fee expense rate
A: We know profits are important, but so is keeping up with the regulatory environment and making sure your programs are compliant and stable. Every reinsurance company we manage is built on a strong foundation of compliance. Our extensive knowledge of reinsurance company formation includes providing the ideal domicile for your company, reporting services, tax preparation and management.
A: You can fill out the form to your right, or contact our Client Services department. They will be happy to assist you in any way they can. You can email them by clicking here, or you can call them at 866-414-3867.