Exactly Why Is Your Reinsurance Company Offshore?
Innovation in the dealer reinsurance business is rare, until now
For decades car dealers have utilized reinsurance companies as a basic part of their F&I plans. Dealers have traditionally domiciled their reinsurance companies in foreign countries for various reasons, including lower costs and easier regulatory requirements.
However, there is a new and innovative way for reinsurance companies to domicile in the continental United States while maintaining the same benefits as an offshore entity without the hassle.
Offshore reinsurance companies are navigating the fickle nature of foreign government regulation and the Internal Revenue Service. Recent scrutiny of offshore transactions has caught even established entities such as Producer Owned Reinsurance Companies in the cross hairs.
The United States Dealer Reinsurance Company, LLC , an Alabama Series LLC Company, has a proven and reliable solution. The management of U.S. Dealer Reinsurance Company has decades of experience setting up, facilitating, and managing dealer reinsurance companies. Founded by John Kerper and Lee Bowron, this innovative approach to dealer reinsurance is sure to excite auto dealers, agents, and insurance companies across the U.S.
John and Lee have devised a system to domicile your reinsurance company in Alabama for similar costs as an offshore company, in less time, and with less paperwork. That’s right…Alabama…. has far greater advantages for your reinsurance company. Who would have thought?
It is not widely known that Alabama is an award-winning domicile for captive insurance companies. The advantages of domiciling your reinsurance company in Alabama are numerous. Here are a few of the following top advantages using Alabama as your reinsurance home:
Speed – We can have your new or existing reinsurance company up and running in one day! Your company is formed when we send in the application to the State of Alabama and your provisional license is immediately granted.
Flexibility – Your company is not limited to reinsurance and may include direct dealer insurance policies such as hail damage deductible, limited warranties, no charge back, and more. Any exposure that can be underwritten by a captive insurance company may potentially be written in your Alabama company.
Costs – Setting up and managing reinsurance companies in Alabama is similar in costs and fees compared with offshore entities.
Similar benefits of an offshore company – Each reinsurance Company is its’ own corporate entity, like an offshore company, receiving the same benefits of an offshore company with regards to distinct tax ids and tax consequences, contains their own trust or other accounts, and separate reinsurance agreements.
U.S. company benefits – As a U.S. company there is no hinderance on funds transfers to new accounts because of reporting requirements placed on financial institutions. There are no requirements to file for a 953(d) election or file any foreign account forms. You also have no exposure to associated penalties under FATCA. A company domiciled in Alabama does not need to file FBAR (Form 114) or a Form 8938. Nor does a U.S. entity have to respond to any government requests for information from US owned foreign companies or worry over future hindrances on offshore operations from the federal government.
Comparison Between Foreign Domiciles and an Alabama Domicile
It is perhaps helpful to compare an Alabama domiciled reinsurance company and a reinsurance company domiciled in a foreign country. Turks and Caicos has traditionally been a very popular domicile for reinsurance companies. Below is a small comparison between an Alabama domicile and a domicile in the Turks and Caicos for your reinsurance company, but is not an exhaustive list of the differences in domicile:
Turks and Caicos
Many reinsurance companies are domiciled here
Generally low regulation from the domicile though it has been increasing in recent years and with the focus on offshore transactions, costs and regulation are likely to increase
Minimum capital is $5,000 dollars
Acceptable to most underwriters and banks.
Takes significantly more time to set up
On shore entity
Award winning domicile
More flexible in the type of business that can be insured (such as direct captive risk as well as third-party reinsurance)
No 953(d) election (request to be taxed as a US taxpayer)
No threat of IRS excise penalties
No offshore data requests
Company can be set up immediately with minimal paperwork
Acceptable to underwriters and banks, but may require approval
Minimum capital required is $10,000 dollars.
Why domicile your reinsurance company in a foreign country when Alabama has a history of being an award-winning captive domicile state?
How much does it cost?
You can have all the advantages of a state regulated insurance company for only $5,000 per year. This would include:
Maintenance of books and records
Compliance with the Alabama Department of Insurance, including premium taxes
Just like the Vulcan standing proudly over Birmingham, you should have a domestic captive domicile for your auto dealer reinsurance company that signifies strength, pride, and reliability.
How Do I Get Started?
Please contact us here to get started! You can start a new reinsurance company or re-domesticate an existing offshore company.
There is no cost for set up and any fees will be billed in January following the formation of your company.
The United States Dealer Reinsurance Company, LLC
400 Vestavia Parkway, Suite 131
Birmingham, AL 35216
Phone: (205) 588-4028