Profit Participation

Reinsurance Strategies To Unlock Your Personal Wealth Creation

Every provider has a profit participation program, but only one provides guaranteed results. EFG’s Wealth Builder Profit Participation Suite delivers on the company’s guaranteed, proven, profit premise: a guaranteed PRU increase, coupled with proven training that empirically delivers an F&I profit increase of $206,400 per producer per year equaling more revenue ceded into the dealer’s reinsurance position.

Wealth Builder is the only reinsurance program on the market backed by EFG’s nationally award-winning engagement model, training, technology, and claims administration. By equipping our client partners with the tools to share in the profitability of the consumer protection solutions they sell, EFG has helped them earn millions in reinsurance profits. Our broad portfolio of services includes:

Formation of profit participation programs from the ground up
Establishing reinsurance companies in offshore jurisdictions to control administrative costs
Ceded as written, generating higher investment income
Expert administration and accounting
Strategic investments
Corporate and client reporting, financials, and coordination of tax returns
Access to other producer participation programs
Integration of taxable or municipal bond fund options with custodial accounts

Your Business Is Unique — And So Are Your Reinsurance Needs

At EFG, we don’t push one model over another. We take an agnostic approach to focus on your business needs and goals and recommend the appropriate model to manage your personal wealth creation. EFG’s profit participation programs allow dealers, lenders, and agents to either:

establish their own reinsurance companies for maximum profitability and tax benefits, or
earn a percentage of underwriting profits without assuming risk.

By directing all or part of the premiums generated from consumer protection products back into their businesses, our clients are better positioned to build wealth over the long term and enhance dealer impact. With almost five decades of industry insight, EFG Companies is a leader in the creation and management of the following programs:

Retrospective Commission Program
Controlled Foreign Corporation (CFC)
Non-Controlled Foreign Corporation (NCFC)
Power Controlled Foreign Corporation (Power CFC)
Dealer-Owned Obligor Company (DOOC)

All Your Wealth Questions Answered

“At GPW & Associates, we see a wide spectrum of reinsurance reporting packages. From our perspective, the reinsurance reporting package provided by EFG Companies is transparent and comprehensive, and hands down one of the best in the industry.”

Greg Petrowski Senior Vice President GPW & Associates, Inc.

Keep a Close Eye on Your Wealth

EFG’s award-winning DRIVE portal’s in-depth reinsurance reporting gives you greater visibility and control:

Investment and underwriting income
Underwriting expenses
Loss ratios, reserves, and claims paid, broken down by product
Cash flow
Breakdown of assets and liabilities
Net reserves and cash to trust

	RETRO	CFC	NCFC	POWER CFC	DOOC
Investment Options	None	See agreement – typically restricted to NAIC approved investments	Up to 75% in Equity funds for earned premium	See agreement – typically restricted to NAIC approved investments	See agreement – typically restricted to NAIC approved investments
Funds Held	In US Trust Account	In US Trust Account	In Offshore Managed Accounts	In US Trust Account	Held by Dealer in US Trust Account
Management	Managed by EFG Companies	EFG Companies; or management company of choice by CFC owner	Managed by Tricor Automotive Group, Held by Tricor RE	GPW and Associates, administered by EFG Companies	GPW and Associates, administered by EFG Companies
Ownership	EFG Companies	Producer Owned/Affiliated Reinsurance Company (PORC/PARC), owned by one or more shareholders	Owned by the collective Tricor (NCFC) group; Dealer is a shareholder in Tricor	Producer Owned/Affiliated Reinsurance Company (PORC/PARC), owned by one or more shareholders	Dealer (not dealerships)
Corporate Tax	No special treatment	Recognized by IRS as US Small Casualty Company [IRS Sec 831(b)]; Pays corporate tax on investment income	Not a US taxpayer; pays 1% excise tax on net premium written	Recognized by IRS as a corporation subject to standard tax rates; special accounting processes required to build advantage	Recognized by IRS as a corporation subject to standard tax rates; special accounting processes required to build advantage
Tax Treatment of Distributions	Ordinary income	Individuals receiving dividends pay preferred tax rate	Dividends are not “qualified”; taxed as ordinary income; redemptions are taxed as a long term capital gain	Dividends are qualified and individuals receiving them pay preferred tax rates	Dividends are qualified and individuals receiving them pay preferred tax rates
Cash Flow/Profit	Participation in underwriting income profit may be limited	Participation in underwriting income and investment income; Ceded as written – high potential for profit	Participation in underwriting income and investment income; Ceded as written – high potential for profit	Participation in underwriting income and investment income; Ceded as written – high potential for profit	Ownership in reserves, underwriting income and investment income; Ceded as written – high potential for profit

Key Questions to Ask Your Administrator

Dealer-Owned Obligor Company

Am I prepared for the regulatory requirements and ongoing management required by a DOOC?
Can I use my own CLIP provider? Or, do I have to use the administrator’s CLIP provider?
In the flow of funds, is my contract revenue always within my DOOC’s possession? Or, are dollars retained by the administrator for payment of claims prior to being transferred to my DOOC trust?
Is the administrator willing to work within my existing DOOC?
How much upfront capital will be required?
What access to unearned reserves will I truly have?
What are the investment guidelines?

Controlled Foreign Corporation

Is your Administrator passing through 100% of investment income and underwriting profit?
Are they charging actual or estimated premium tax rates?
Are they charging ceding fees?
Do they charge an incremental fee per claim administered?
Do they charge a bankruptcy or security fee per contract?
Is there a monthly fee per in-force contract to run off your book of business in the event you terminate your relationship?
Can the Administrator defer distributions upon your request?

Power Controlled Foreign Corporation

Ask the same fee-related questions of your Administrator as suggested for a CFC as well as:

What are their investment criteria (bond vs equity)?
What are their restrictions to access unearned premiums?
How is the tax treatment being managed?
Are you selling the administrator obligor products already approved in every state you do business?
Are they charging formation costs?
Do you have unlimited premium limits?
Do you have a proper exit strategy?

Retrospective Commission Program

Is there an initial vesting period (i.e., a period when you don’t participate)?
Are you receiving investment income (or just underwriting profits)?
Is the investment income paid at a low, defined rate (say, the 30- to 90-day T-bill rate) or is it based upon actual earnings?
Can the Administrator discontinue your participation if you terminate your writing relationship with the Administrator?

Each EFG reinsurance solution has back-stop insurance through A.M. Best A-rated insurance companies and is designed especially for each dealer and agent we serve.

Contact EFG today to schedule a reinsurance review.

*EFG Net PRU Guarantee: Must qualify for PRU Guarantee based on Business Development Assessment. See the PRU Guarantee Addendum Agreement for full program terms and conditions.