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Covington has extensive expertise in the design and implementation of complex insurance products and arrangements. We have helped clients such as M Financial Group and Sun Life Financial with the design of novel variable insurance and annuity products, including unregistered products based on hedge funds.
We have assisted various business clients in evaluating the tax treatment and benefits of corporate-owned life insurance and establishing and unwinding COLI programs.
We regularly have helped design and implement novel cost-effective alternatives to conventional insurance arrangements, where taxes play an important role. Frequently, these alternatives combine elements of self-insurance and risk shifting, while permitting tax deductions for premiums paid. Examples of such alternative arrangements include the use of captive insurance companies, risk retention arrangements, retrospectively rated insurance, loss portfolio transfers, and finite risk insurance. We act as tax counsel to the Financial Institutions Reserve Risk Retention Group, a banking-industry captive insurance company that provides officers and directors liability insurance to its member companies. We have tax controversy experience involving captive insurance company issues at the audit, Appeals, and litigation levels.
We help policyholders structure insurance settlements to minimize the risk of insurer insolvency while simultaneously minimizing the taxes imposed on recoveries they receive and maximizing the deductions for damages they pay.
Representative Matters
- Advice to insurance carriers and distributors on insurance product design.
- Advice to large financial institutions on implementation of corporate owned life insurance programs.
- Advice on formation and structure of industry captive insurance and risk retention arrangements.
- Advice to insurance claimants on structuring policy settlements
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