Disclosures

1. Defining Reinsurance

Generally speaking, reinsurance exists when an insurer- “front insurer”- transfers the reserved premium funds on insured risks to a second entity, the “reinsurer,” which then takes the risk of claims, and retains the underwriting profits when the risk expires, plus any accrued investment income earned by the reserved funds.

In the Portfolio program, the front insurer is listed on the contracts sold to consumers (VSC, GAP, warranty, or ancillary). After the business is remitted by the dealership, the funds reserved to cover claims (“premium reserves”), less fees, are transferred to and held by an Affiliated Reinsurance Company (ARC) closely associated with the dealer. These reserves are used to pay any claims, and ultimately the ARC earns the underwriting profits and investment income. Portfolio structures the ARC and profitably manages the month-to-month operations of the ARC.

Also, for purposes of Federal tax law, the Portfolio program’s structures are considered reinsurance companies and are treated as such under the Internal Revenue Code. At the same time, many states and other jurisdictions do not classify these companies as “insurance” or “reinsurance” companies. For clarity throughout this web site, we will continue to refer to them as reinsurance companies.

Prospective clients in any of the 50 states are eligible for Portfolio reinsurance management services.

2. Investment Control

While you, the reinsurance company owner, will be in control of your company’s investments, your results will be based on your individual choices, business experience, expertise, as well as the market conditions and economic realities. Portfolio reinsurance management includes investment policy guidelines that provide prudent bounds for your company’s investments.

3. Investment Performance

Of course, there are no guarantees concerning the profitability you may experience. The past performance of Portfolio’s clients is no guarantee of your own results. Portfolio cannot guarantee your company’s future results or success.

4. Our Record of Achievement in Numbers for the Dealer Owner

Portfolio companies have enjoyed excellent earned loss ratios, healthy investment income returns, and substantial after tax profits since 1990. Dealer/owner control of the reserve accounts and the investments means that you are in control of the profits your company achieves. Portfolio provides the expertise to assist you in achieving your profit goals.

There are no guarantees concerning the profitability you may experience, and past performance of Portfolio’s other clients is no guarantee of your own results. Portfolio cannot guarantee your future results or success. At the same time, we will be happy to share with you our historical records, dating from 1990 to the present, on over 800 Portfolio reinsurance companies’ performance. Once you review these facts, we believe that you will conclude that becoming a Portfolio dealer is a prudent business choice.

5. Loans Disclosure

The Portfolio program allows dealers to make loans from their reserve accounts as part of a balanced investment portfolio and subject to approval by Portfolio. We take pride in our proper and sophisticated loan management services. Please ask for more details when you contact us.

6. More about the IRS TAMs

Two Portfolio program clients were examined by the IRS, during which time they were subjected to a multi-pronged, two year review by the Service. At the conclusion of the examination, the Service published two Taxpayer Advice Memoranda that showed their reinsurance companies served a legitimate business purpose in a way that was proper and correct. While the Internal Revenue Code section 6110(k)(3) states that the TAMs may not be used or cited as precedent, the fact remains that the Portfolio program has undergone extensive review by the IRS and its two clients were found to be in compliance with Federal tax law. To Portfolio’s knowledge, no other similar program can boast the same success.