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 Banks
and financial institutions are amongst the largest consumers of fixed income assets,
and acquire these assets in a variety of forms ranging from individual securities
to structured investments. Many financial institutions have significant positions
in BOLI (Business Owned Life Insurance), a highly structured transaction involving
insurance, asset management, and derivatives. Consistent with our holistic approach
to client relationships, our ability to offer insurance advisory services to financial
institutions is a logical extension of both our asset management and structured
finance activities.
FPCM's insurance strategies team has expertise
in every aspect of policy structure, execution, and administration. Unlike traditional
BOLI brokers, FPCM sits beside our clients at the negotiating table and advocates
on their behalf in discussions with insurance carriers, stable-value providers,
and asset managers.
FPCM's compensation is typically not derived from product. Therefore, FPCM's interests
are not aligned with any carrier or provider. Experience plus strong relationships
with carriers, stable-value providers, and managers helps FPCM pursue best execution
for its clients.
 Extensive
BOLI Expertise and Perspective
The professionals at First Principles Capital Management have first-hand experience
in understanding what institutions need and look for from business-owned life insurance.
Like our clients, we have employed BOLI to offset long-term liabilities and to increase
shareholder value.
As bankers, we have undertaken exhaustive pre-purchase analysis and have executed
and managed billions of dollars of BOLI assets. We also have been leaders in the
evolution of the BOLI marketplace. Our COO was an early pioneer in the application
of institutional separate account life insurance for financial institutions. Additionally,
while at J.P. Morgan, our CFO was the architect of the innovative stable-value fund
that helped revolutionize business owned life insurance.
Our partners also have significant experience in the primary regulatory issues facing
financial institutions, including accounting, capital adequacy, and tax matters*.
* First Principles Capital Management, LLC does not dispense legal, accounting,
or tax advice.
Pioneering
Approach to BOLI Assets
As accomplished insurance product designers, we have built strong working relationships
with major service providers in the BOLI marketplace including life insurance carriers,
investment management firms, and stable-value contract providers. These relationships
are part of unmatched market awareness and know-how that facilitate best execution
for our clients. FPCM's expertise and superior execution capabilities are beyond
compare in the marketplace today, as evidenced by our considerable client roster.
Many of the largest and most sophisticated industrial and financial institutions
turn to FPCM for their BOLI needs.
In a fully transparent and open-architecture framework, FPCM assists clients through
all stages of the transaction. This includes negotiations of key economic terms
with insurance carriers and investment managers as well as a comprehensive assessment
of the BOLI's prospective impact on the institution's financial statements.
As advisor and administrator, FPCM is compensated directly by the client, not by
product providers. This ensures that our interests are always aligned with those
of the client. Moreover, FPCM often enters into agreements whereby it is awarded
an incentive payment linked to tangible cost savings generated for a client.
Progressive
Approach to BOLI Service
First Principles Capital Management uses cutting-edge technology to service and
analyze BOLI assets through its affiliate, FPCM Administrative
Services, LLC.
FPCM Administrative Services is a leading BOLI administrator with more than $30
billion of separate and general account BOLI assets. Our team administers more than
150 master contracts encompassing over 300,000 insured lives. Our specialized technology
and experienced team of professionals ensure that the BOLI administration is fully
SAS 70 compliant.
Independent
BOLI Administration Services for Inforce Policies
FPCM Administrative Services, LLC provides a single resource administrative platform
to manage the full complement of our clients' inforce BOLI assets. Our independent
status allows our team to approach its service responsibilities as an advocate for
the bank with the objective of optimizing the return on the BOLI portfolio. We are
not conflicted by carrier relationships, legacy service fees, or broker contracts.
Services typically include:
- Uniform monthly reporting format
- Classification of policy types for reporting
- Common monthly reporting date, i.e., last business day
- Yield and expense variance analysis
- Stable value credit rate forecasting
- Reallocation analysis
- Credit rate reset attribution analysis
- Global asset allocation reports
- Consolidation of life of plan results for OCC compliance
- Quarterly investment advisor updates
- Monthly or quarterly social security death claim audit
- Death claim administration support
- Financial projections for budgeting
- Annual reviews with investment managers
- Historical performance
- Transaction re-documentation
FPCM will also work with the bank to establish a principal to principal relationship
with its legacy BOLI carriers.
New BOLI
Placement Services
FPCM provides independent BOLI placement services. With the passage of "COLI Best
Practices" legislation, many banks have started to consider adding to their BOLI
portfolios. FPCM manages the entire BOLI transaction process, from pre-purchase
analysis and RFP through policy execution, post-purchase analysis and administration.
Our Process is broken into 3 phases:
FPCM provides our clients with a full disclosure service contract.
- FPCM's pre-purchase analysis focuses on obtaining best execution for our client
- FPCM warrants to its clients that the firm will receive no compensation in any form
from any vendor associated with the transaction
- FPCM warrants that it will disclose any and all forms of compensation that parties
to the transaction share with other vendors
- All FPCM fees are payable outside the policy
-
FPCM services may be terminated for failure to perform
FPCM fees are divided into two categories:
As advisor and administrator, FPCM is compensated directly by the client, not by
product providers. This ensures that our interests are always aligned with those
of the client. Moreover, FPCM often enters into agreements whereby it is awarded
an incentive payment linked to tangible cost savings generated for a client.
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