Thomson sweet & maxwell london 2012
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ITSAPT Authors’ Conference (Thomson-Sweet & Maxwell, 2 nd Ed. 2011) 8 Nov. 2012 London • Assoc. Dean William Byrnes International Tax & Financial Services Graduate Program for professionals (www.llmprogram.org) Delivered via Video-Conferencing contact me: [email protected] or +1 619 961 4211 • Brought to you also in part by The Einstein Group – Benjamin Terner, Managing Director – Einsteinfs.com – Alternative Risk Transfer Funding – Contact: (646) 233-3303 or [email protected] t. Einstein g.
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Alternative Risk Transfer for catastrophic events leveraging captives and premium financing, catastrophic bonds
Transcript of Thomson sweet & maxwell london 2012
ITSAPT Authors’ Conference(Thomson-Sweet & Maxwell, 2nd Ed. 2011)
8 Nov. 2012 London
• Assoc. Dean William ByrnesInternational Tax & Financial Services Graduate Program for professionals (www.llmprogram.org)Delivered via Video-Conferencing contact me: [email protected] or +1 619 961 4211
• Brought to you also in part by The Einstein Group– Benjamin Terner, Managing Director– Einsteinfs.com– Alternative Risk Transfer Funding– Contact: (646) 233-3303 or [email protected]
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Whom am I ?- 38 volumes- 4 textbooks- 25 book chapters- 800 articles- 100+ conference and training engagements
Leader of National Underwriters/Summit Business Media Financial Service Publication - dominant information service in the insurance/advanced markets industry with 300,000+ subscribers.
Before academia - Senior Manager, then Associate Director of international tax for Coopers and Lybrand. Academia – tenured Professor of Law then Associate Dean.
See http://www.tjsl.edu/directory/william-h-byrnes-iv
Alternative Risk Transferfor Real Estate
• Traditional Risk v. Non-Traditional Risk• ART = typically uninsurable or too costly to
insure on traditional market• E.G.,
– Loss of a Significant Tenant– Loss due to Eminent Domain– Loss caused by Zoning Change– Loss caused by Loss of Mortgage
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Captive Marketplace
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What Makes APEX Unique?• Incorporated Premium Financing Feature
– 90% of total gross premium
• Group Captive Structure– Retention of good underwriting history
• Affiliation with International Insurer– Safety and global recognition (RQIH.COM)
• Underwriting Proposals– No cost to client or tax professional
• End of Year Implementation – One to two week process
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The above chart illustrates insurance reserves available to pay claims by use of various insurance alternatives.*Assumptions**: Self Insurance-federal income tax rate 34%; ROI 12.5% annually.Section 831(b) Captive- $50,000 capital, $30,000 first year expense, $25,000 annual operating expense; reinsurance expense 4% on 50% of reserves; insurance investment return 5% annually. Group Captive- 8% commission, 2.25% annual expense; insurance investment return 5% annually. APEX-federal income tax rate 34%; ROI 12.5% annually.* See assumptions and Legal. **Assumes a 1.0 positive claims experience over 5 years.
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Comparison
• Compare using Premium Financed Group Captive versus After-Tax Self Insurance– Self-Insurance Reserve Not Deductible– Group captive provides easy access to
captive platform for reasonable insurance premium payments
– Access to alternative lines of coverage currently self-insured
– Cash-flow management and benefit
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Opportunities for 2012?
• 2012 Prospects – Businesses with substantial revenue ($25-100
Million +) with positive cash flow; would like to keep cash on hand for 2013
– Businesses earning less ($5-25 Million), traditionally low cash flow; could still benefit from Alternative Risk Underwriting
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