ICOLI can provide improvements to your investment returns, but how do you handle this asset on your books? ICOLI Accounting ICOLI accounting is straight forward. GAAP Reporting ICOLI surrender value is reported as an “Other Asset” …
The Fundamentals of Insurance Company Owned Life Insurance (“ICOLI”)
According to statutory filings, North American insurance companies own more than thirty-billion dollars of institutional life insurance. This Article explores the basic attributes of ICOLI, the applicable tax and regulatory structure, the available investments, the process to acquire ICOLI and how insurance companies deploy this strategy to outpace yield earned on traditional investments.
Why Hundreds of Insurance Carriers Hold ICOLI
Hundreds of insurance carriers hold insurance company-owned life insurance (ICOLI) as part of their investment strategy.
Is ICOLI Worth the Effort?
Insurance company owned life insurance (ICOLI) can provide an increase in retained yield on a given investment. Usually, the pickup is more than +150bps per year.
Basic Taxation for ICOLI
ICOLI can provide improvements to your investment returns, but how is this asset treated for tax purposes? ICOLI Taxation ICOLI is a tax-preferred asset. (See IRC secs. 7702, 72(e), and 101(j)) Taxation Investment into the contract…
2021 Q2 Tax Planning for Corporate Investments
Now is the time to tax-plan for your company’s equity investments. Why now? President Biden has proposed an increase in C corporation tax rates, which would raise the federal rate from 21% to 28%. Corporations can choose to take action…
Are Your Company’s Current Investments Available Tax-free
A common misconception is that ICOLI (Insurance Company-Owned Life Insurance) is just a general account investment. It is not. Traditional market traded investments are available within an ICOLI wrapper – likely, some that you already own.
Potentially Increase Equity Yield by up to +150bps
Wrapping your current equity funds in ICOLI can increase your yield. Insurance company owned life insurance (ICOLI) is an investment strategy that insurance companies commonly use to wrap their on-balance sheet investments.
Creating Tax-Free and RBC Efficient Equity Position
High reward, high risk? Insurance companies commonly attempt to increase portfolio yield by increasing allocations to higher risk investments. If the investment performs as desired the associated taxes reduce returns.
How to Minimize Your Risk-Based Capital Reserving
Minimizing your risk-based capital reserving maximizes the amount of capital invested in your portfolio. A common way in which insurance carriers reduce their risk-based capital reserving is by wrapping a portion of their on-balance sheet…