Insurance Company Owned Life Insurance (“ICOLI”) helps a company achieve investment diversification, because it performs unlike any other asset class. It offers one of the most compelling returns per unit of risk in the marketplace and helps insurance companies optimize their portfolios and better position themselves along the efficient frontier.
General account products from highly rated mutual carriers perform like AAA instruments from a volatility perspective yet benefit from favorable tax treatment and large portfolio efficiencies. Furthermore, some carriers’ products benefit from high-quality risk assets in their underlying investment portfolios.
To achieve the same tax-adjusted returns, a company would have to accept significantly higher volatility. In addition to being a superior alternative to high-volatility instruments, ICOLI offers significantly better returns than low-volatility instruments, which carry significant inflation / portfolio deterioration risk.
General account ICOLI products mitigate interest rate risk. Not only are the crediting rates less volatile than that of interest rates generally, but, if market interest rates rise, the carriers support the underlying cash surrender value and reset (upward) their respective crediting rates (subject to a lag reflective of portfolio duration and other factors).
To learn more about how ICOLI could improve your company’s financial position, please contact us.