Profit Participation Programs

Most common structure in the marketplace

Dealer owns it – no pooling with other dealerships’ F&I business

Formed as a “c” Corp – dealer chooses company name, directors, officers and shareholders

Ownership structure flexibility

Most common domicile is the Turks and Caicos Islands

IRC Section 953(d) election – treated as a domestic insurance company under the IRC

US tax return and annual statement are completed each year

Assets/cash are normally held in trust at a US bank (money never leaves the US)

Dealer/owner flexibility:dividends, loans, surplus investments

Domiciled in an offshore country

Ownership is represented by purchasing preferred, non-voting stock

No annual premium thresholds

Company decisions are made by the Board of Directors, hence, no control by the shareholders

Tax returns and annual statements are not reported to the IRS

Not subject to federal income tax, but pays a federal excise tax of 1% of net written premium

Shareholder

Passive Foreign Investment Company (PFIC) exemption*

*Quantitative threshold test requires the insurance company to qualify as an insurance company under IRS code and have liabilities which are more than 25% of the total assets of the company (F&I unearned premium reserves do not count as liabilities). This “test” was part of the 2017 Tax Cuts and Jobs Act.

Dealer forms a new corporation (C Corp) in the state of the producing dealership(s)

DOWC is the obligor, but not a licensed insurance company

DOWC registers as a service contract provider in the states it will do business in

Program is administered by a third party, in this case Zurich

A failure-to-perform contractual liability policy (CLP) is included in the program

Minimum capital may be higher than PORC or NCFC structures ($50,000 - $500,000)

Trust account requirement is at the discretion of the administrator/CLP provide

No upfront money to participate

Minimal investment income paid

No downside risks

No dealer control or decision making

Retro payments are normally paid to the dealership

Our advanced loan program helps the dealers achieve their individual financial goals and offers flexibility for usage to navigate through today's challenging automotive market.