A Guide to Using Insurance as a Tax, Financing and Capital Solution

Clients depend on their lawyers for creative solutions to risks they face in their day-to-day business, and to resolve roadblocks that prevent important transactions from closing. In this program, Kenneth R. Pierce will discuss the use of specialty insurance products to indemnify clients for potential tax liability, to achieve tax and regulatory capital efficient investment returns, and to facilitate the financing of alternative assets.

“Reps and warranties” insurance is now a standard tool to facilitate mergers and acquisitions.  In this course, Mr. Pierce will go “beyond reps,” providing case studies and transaction diagrams to illustrate how insurance is being used in novel ways for broader corporate finance purposes.  It is critical for lawyers to be aware of the existence of these insurance products and to be equipped to structure and negotiate the terms of coverage which are necessary to achieve their clients’ objectives.

Learning Objectives:

1. Review the background of traditional risk mitigation in corporate transactions, including the use of insurance as a risk management tool
2. Discuss the basics of tax insurance, the types of tax risks that are insurable, the underwriting and submissions process, and additional considerations
3. Grasp “COLI” or Corporate Owned Life Insurance, including an overview of the IRC Section 101(j), and the process of using a variable COLI policy
   
4. Facilitate asset-based financings using insurance, understand the relevant assets, typical asset-financing structure, and the growing market for insurance wrap as a solution
5. Use insurance to reduce risk based capital charges and enhance credit