Company acquires a life insurance policy insuring its CEO
OTHER CASE STUDIES
The CEO, and large shareholder, of a privately-held company negotiated a buy-sell arrangement with the private equity (PE) firm to acquire a large portion of his outstanding shares in the event of his death. It was important to provide liquidity and enable both the PE and the CEO to implement appropriate financial and estate planning.
Challenge
TRC Financial was tasked with placing $80,000,000 of death benefit while carefully managing the reinsurance market in light of the total life insurance coverage already in place for the CEO. We represented the insured, the company and the private equity firm who was leading the capital investment. The deal terms and timing of the pending capital infusion made it critical to carefully manage the reinsurance market across a number of life insurance carriers in order to place the coverage.
Solution
The private equity firm needed a structure to meet the needs of the company in addition to providing flexibility for both short and long-term liquidity. In order to deliver the most advantageous pricing, TRC Financial leveraged its confidential and private underwriting process to protect the CEO and deliver the best pricing for the company. “Our proprietary underwriting process was critical to successfully placing this coverage,” said TRC Financial Principal Jim Roberson. “By keeping our firm and clients in control of the process, we can successfully negotiate and deliver the best outcomes.”
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$80,000,000 of death benefit was issued on the CEO with the company as the owner and beneficiary
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A buy-sell arrangement and life insurance death benefit allowed the CEO to properly implement his estate plan
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The premium funding strategy deployed minimized the earnings impact to the company and its shareholders
$80M Funded with Minimal Earnings Impact
$80,000,000 of key person life insurance coverage on the CEO of one of the largest employers in the United States.
Successfully negotiated reinsurance in light of the total life insurance coverage inforce.
Structure allowed the company to fund the policies with minimal earnings impact.
The coverage was arranged with three life insurance carriers who met the pricing and financial requirements.
Delivered immediate liquidity to the estate in the event of the CEO's death.
The coverage structured to provide flexibility for both short and long-term liquidity needs.
The above client case study is based on the economic results for one of TRC Financial's clients. The economics associated with each individual client are unique and impacted by the insurance product acquired, the performance of the life insurance policy, timing of premium payments, medical underwriting for the insured(s), and the actual life expectancy of the insured(s). The client case study is not intended to be opinion or advice on legal, tax, accounting or investment matters. Private counsel should be consulted prior to application of this general information to specific situations.
These results are for illustrative/informational purposes only and may not reflect the typical purchaser's (client’s) experience and are not intended to represent or guarantee that anyone will achieve the same or similar results.