Private Placement Insurance Products, LLC

Report Pursuant to Rule 17a-5 (d)

Financial Statements

For the Year Ended December 31, 2016

Private Placement Insurance Products, LLC

The accompanying notes are an integral part of these financial statements.

Statement of Financial Condition

December 31, 2016

Assets

Cash $ 139,410

Accounts receivable 84,653

CRD Deposit 2,000

Total assets $ 226,063

Liabilities and Member's Equity

Liabilities

Accounts payable and accrued expenses $ 50,590

Total liabilities 50,590

Member's equity

Member's equity 175,473

Total member's equity 175,473

Total liabilities and member's equity $ 226,063

Private Placement Insurance Products, LLC

The accompanying notes are an integral part of these financial statements.

Statement of Income For the Year Ended December 31, 2016

Revenues

Commissions

$ 922,364

Total revenues

922,364

Expenses

Employee compensation and benefits

131,336

Commission 466,019

Professional fees 35,823

Occupancy expense 41,815 Other operating expenses 108,226

Total expenses 783,219

Net income (loss) before income tax provision 139,145

Income tax provision

3,300

Net income (loss) $ 135,845

Private Placement Insurance Products, LLC

The accompanying notes are an integral part of these financial statements.

Statement of Changes in Member's Equity

For the Year Ended December 31, 2016

Member’s

Equity

Balance at December 31, 2015 $ 123,628

Member's distributions (84,000)

Net income (loss) 135,845

Balance at December 31, 2016 $ 175,473

The accompanying notes are an integral part of these financial statements.

Private Placement Insurance Products, LLC

Statement of Cash Flows

For the Year Ended December 31, 2016

Cash flow from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net

cash provided by (used in) operating activities:

(Increase) decrease in assets:

Accounts receivable

$

$ (5,010)

135,845

Increase (decrease) in liabilities: Accounts payable and accrued expenses 858

Total adjustments ( 4,152)

Net cash provided by (used in) operating activities 131,693

Net cash provided by (used in) in investing activities -

Cash flow from financing activities:

Member distributions (84,000)

Net cash provided by (used in) financing activities (84,000)

Net increase (decrease) in cash 47,693

Cash at beginning of year 91,717

Cash at end of year

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest

Income taxes

$ -

$ 3,300

$ 139,410

Private Placement Insurance Products, LLC

Notes to Financial Statements

December 31, 2016

Note 1: GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Private Placement Insurance Products, LLC (the "Company"), was originally organized in the State

of Delaware on March 14, 2005, and was approved to conduct business in California on August 17,

2006. The Company is a single member limited liability company operating as a registered

broker/dealer in securities under the Securities and Exchange Act of 1934, and is a member of the

Financial Industry Regulatory Authority (“FINRA”).

The Company is authorized to sell variable life insurance or annuities, and private placement of variable life insurance or annuities on a best efforts basis. The Company assists in the placement of and due diligence for Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans.

Under its membership agreement with FINRA and pursuant to Rule 15c3-3(k) (2)(i), the Company conducts business on a fully disclosed basis and does not execute or clear securities transactions for customers. Accordingly, the Company is exempt from the requirement of Rule 15c3-3 under the Securities Exchange Act of 1934 pertaining to the possession or control of customer assets and reserve requirements.

Summary of Significant Accounting Policies

The presentation of financial statements in conformity with accounting principles generally

accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Accounts receivable are stated at face amount with no allowance for doubtful accounts. An allowance for doubtful accounts is not considered necessary because probable uncollectible accounts are immaterial.

The Company recognizes revenue when earned.

Rent expense for the year ended December 31, 2016, was $41,815 included in occupancy expense.

The amount of rent is determined annually by the expense sharing agreement.

Private Placement Insurance Products, LLC

Notes to Financial Statements

December 31, 2016

Note 1: GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Continued)

The Company is treated as a disregarded entity for federal income tax purposes, in accordance with single member limited liability company rules. All tax effects of the Company's income or loss are passed through to the member. Therefore, no provision or liability for Federal Income Taxes is included in these financial statements.

The Company has evaluated events subsequent to the balance sheet date for items requiring recording or disclosure in the financial statements. The evaluation was performed through the date the financial statements were available to be issued. Based upon this review, the Company has determined that there were no events which took place that would have a material impact on its financial statements.

Note 2: INCOME TAXES

The Company is treated as a disregarded entity for federal income tax purposes, in accordance with

single member limited liability company rules. All tax effects of the Company's income or loss are

passed through to the member. Therefore, no provision or liability for Federal Income Taxes is

included in these financial statements.

The Company is subject to a limited liability company gross receipts tax, with a minimum franchise tax. As of December 31, 2016, the income tax provision consists of the following:

Franchise tax $ 800 Gross receipts tax 2,500

Total income tax provision

$ 3,300

Note 3: RELATED PARTY TRANSACTIONS

The sole member in the Company is also a member in a related entity - MB Schoen & Associates,

Inc. (MBSA). The Company has an expense sharing agreement with the related entity. As outlined

in the agreement, rent, salaries, and other operating expenses will be shared. For the year ending

December 31, 2016 $250,909, of operating costs were allocated from the related entity to the

Company. At December 31, 2016, $61,662 was due from MBSA, and included in accounts

receivable. In addition $20,870 was due to MBSA as of December 31, 2016, and was included in

accounts payable and accrued expenses.

Private Placement Insurance Products, LLC

Notes to Financial Statements

December 31, 2016

Note 3: RELATED PARTY TRANSACTIONS

(Continued)

For the year ended December 31, 2016, 60% of the Company’s revenue passed through the related entity. This revenue represents trail commissions earned by the sole member, but earmarked for the Company to fund its operations. In addition $367,773 in commissions expense was redirected commissions paid to MBSA.

It is possible that the terms of certain of the related party transactions are not the same as those that would result for transactions among wholly unrelated parties.

Note 4: RECENTLY ISSUED ACCOUNTING STANDARDS

Company management has reviewed the accounting standards updates issued by the FASB that were

either newly issued or had effective implementation dates that would require their provisions to be

reflected in the financial statements for the year ending December 31, 2016. Based upon this review,

the Company has implemented the pronouncements that require adoption (if any). They have also

concluded that the remaining pronouncements have either limited or no application to the Company

and, in all cases, implementation would not have a material impact on the financial statements taken

as a whole.

Note 5: NET CAPITAL REQUIREMENTS

The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule

(SEC rule 15c3-1), which requires the maintenance of minimum net capital and requires that the

ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. Rule 15c3-

1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net

capital ratio would exceed 10 to 1. Net capital and aggregate indebtedness change day to day, but

on December 31, 2016, the Company had net capital of $116,425 which was $111,425 in excess of

its required net capital of $5,000; and the Company's ratio of aggregate indebtedness ($50,590) to

net capital was .43 to 1, which is less than the 15 to 1 maximum allowed.

Private Placement Insurance Products, LLC

Notes to Financial Statements

December 31, 2016

Note 6: RECONCILIATION OF AUDITED NET CAPITAL TO UNAUDITED FOCUS

There was no difference between the computation of net capital under net capital SEC Rule 15c3-1 and the corresponding unaudited FOCUS part IIA.

Note 7: COMMITMENTS AND CONTINGENCIES

The Company is required to file income tax returns in state tax jurisdictions. The Company’s tax returns are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction. The statute of limitations for state purposes is generally three years, but may exceed this limitation depending upon the jurisdiction involved. Returns that were filed within the applicable statute remain subject to examination. As of December 31, 2016, no jurisdiction has proposed any adjustment to the Company’s tax position.

Note 8: GUARANTEES

FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying factor (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of indebtedness of others. The Company has issued no guarantees at December 31, 2016 or during the year then ended.

Private Placement Insurance Products, LLC Schedule I - Computation of Net Capital Requirements

See independent auditor's report

Pursuant to Rule 15c3-1 As of December 31, 2016

Computation of net capital

Member's equity

$ 175,473

Total member's equity $

Less: Non-allowable assets

Accounts receivable, in excess of payable (57,048) CRD Deposit (2,000)

175,473

Total non-allowable assets (59,048 )

Net capital 116,425

Computation of net capital requirements

Minimum net capital requirements

6 2/3 percent of net aggregate indebtedness $ 3,373 Minimum dollar net capital required $ 5,000

Net capital required (greater of above) (5,000)

Excess net capital

$ 111,425

Ratio of aggregate indebtedness to net capital .43: 1

There was no difference in net capital computation shown here and the net capital computation

shown on the Company's unaudited Form X-17A-5 report dated December 31, 2016 (See Note 6).

See independent auditor's report

Private Placement Insurance Products, LLC

Schedule II- Computation for Determining of Reserve

Requirements Pursuant to Rule 15c3-3

As of December 31, 2016

A computation of reserve requirements is not applicable to Private Placement Insurance Products,

LLC as the Company qualifies for exemption under Rule 15c3-3(k)(2)(i).

See independent auditor's report

Private Placement Insurance Products, LLC

Schedule III - Information Relating to Possession or Control Requirements Pursuant to Rule 15c3-3

As of December 31, 2016

Information relating to possession or control requirements is not applicable to Private Placement Insurance Products, LLC as the Company qualifies for exemption under Rule 15c3-3(k)(2)(i).

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Private Placement Insurance Products LLC

Report on the SIPC Annual Assessment

Pursuant to Rule 17a-5(e)4

For the Year Ended December 31, 2016