Insurance Company-Owned Life Insurance
Enhancing Investment Results with ICOLI
Insurance companies are continuously looking for investments that optimize their risk/return profile with a focus on improving earnings, surplus, and financial strength. These investments solve many business purposes and must comply with complex insurance regulatory requirements. What if the insurance company could improve its investment earnings and maintain or improve its overall investment structure and financial strength?
Insurance company owned life insurance (ICOLI) is one of the few vehicles that can help improve tax-adjusted earnings, receive favorable risk based capital (RBC) treatment and enhance the investment choices available to insurers.
Many life, health and P&C companies use ICOLI to achieve a more diversified investment portfolio and comply with their surplus investment policy guidelines. The interest in ICOLI has increased as the economic environment has left insurers with fewer alternatives to improve their investment results.
Suite of Services to Help Insurance Companies using Insurance Company-Owned Life Insurance
Newport Group’s ICOLI diagnostic evaluates the key elements necessary to structure, implement and maintain an efficient ICOLI program. Utilizing the information gathered in this diagnostic, along with your current goals and objectives, we consult with you on the ideal strategy for your company’s ICOLI program.
We address and provide thorough documentation of the specific action steps and risks that regulators require to be identified prior to the purchase of ICOLI. We also provide ongoing regular reporting to assist in meeting your continuing regulatory requirements.
Newport Group provides detailed product evaluations and recommendations to assist in selecting the right asset classes and managers. We construct and monitor an efficient mix of eligible investments designed to generate the highest level of expected return for any given level of risk.
Our complete suite of administrative services are designed to reduce the burden on your organization. Specific deliverables include a program implementation timeline, accounting and financial reporting, policyowner services and an annual plan review.
(1) Variable life insurance policies have certain inherent risks, including the possible loss of principal. Risks associated with variable life insurance policies include, but are not limited to, liquidity, market volatility, asset default and investor control tax risk. Additionally, variable life insurance policies’ fees and expenses include, but are not limited to, mortality costs, stable value charges, policy administration fees and asset management fees. Please refer to your Private Placement Memorandum, Stable Value Agreement and/or Life Insurance Policy for definitions of the terms and/or data included in this report and to better understand the risk and fees associated with these policies.
Note that the views expressed above are those of Newport Group and do not constitute legal, tax or accounting advice; readers are strongly urged to seek independent accounting, tax, and/or legal advice in applying this information. The information provided herein is based solely on our informal, general understanding of the relevant technical issues as well as the products and plans that may be involved. This information is not intended nor should it be used as an opinion on accounting, tax, and/or legal issues.This release is a high-level summary of a complex subject that is intended for Newport Group’s clients and intermediary partners and should not be understood as providing a comprehensive discussion of all issues or requirements under the regulations or as a guide to compliance and is for informational purposes only. Newport Group Securities, Inc. ("NGS") is both a FINRA-registered broker-dealer and an SEC-registered investment adviser. All securities transactions are provided by the broker-dealer, while all investment advisory services are provided through the registered investment adviser. When offering variable insurance products, Newport Group Securities, Inc. acts solely in its capacity as a broker-dealer. Other insurance products may be offered by Newport Group, Inc. NGS is located at 300 International Parkway, Heathrow, FL 32746 and is an affiliated entity of Newport Group, Inc. No guarantee as to investment results. All investments in securities involve risks including possible loss of principal.