How REITs Can Hedge an Employee Benefit

Informally funding a DCP without Triggering Distribution Requirements
In order for Real Estate Investment Trusts (“REITS”) to maintain their designated tax treatment status, they must meet the annual REIT testing requirements. REITS are required to distribute at least 90% of taxable income in the form of dividend payments to their shareholders. Income realized through the growth of mutual funds – even to pay an employee benefit – must be included in the taxable income calculation, causing significant shortfalls when plan balances rise.

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.

Record Group Insurance Death Claims in 2021

Last year, group life insurance companies experienced a record number of death claims. Two recent reports include:

MetLife’s adjusted quarterly earnings in the U.S. group-benefits unit plummeted 95% to $20 million, from $383 million the year-earlier with increased deaths of younger people (i.e., those under age 65) with employer-sponsored benefits. MetLife paid out $1.06 for each $1 of group-life-insurance premium collected.