Reinsurance

Reinsurance Opportunities

You may have been approached and may be considering the idea of a PORC (Producer Owned Reinsurance Company), PARC (Producer Affiliated Reinsurance Company) or CFC (Controlled Foreign Corporation) for your Service Contract business. These terms are all used to describe the popular concept that allows a dealer principal to form an off-shore reinsurance company to reinsure the service contract risk and enjoy the benefits of owning an insurance company. The type of company described here, although formed off-shore, is not a full fledged off-shore company – as that term is traditionally used. A true off-shore company – where the funds are held in another country – is not a practical scenario for service contract business. Instead a PORC is something like a cross between a domestic insurer and a true off-shore insurer. With a PORC the company is formed outside of the United States, but all funds remain in the US subject to US investment and tax regulations.

 

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