COLI Enhancement/Take-Over Offering

How It Works

Our approach involves the strategic pooling of policy assets to maximize their value and security. Here’s a step-by-step overview of how this process functions:

  1. Asset Contribution to Trust Fund Pool:

    • Policy assets are contributed to a Trust Fund Pool at their Cash Surrender Value.

    • In exchange, the Credit Union receives a participation certificate that represents an undivided beneficial security interest in both the asset values and payments from the entire pool of assets.

  2. Shift in Policy Assets:

    • The policy assets transition from being "Carrier Named" to a "Pooled CUOLI" (Credit Union-Owned Life Insurance) format, effectively changing their designation from one type of asset to another.

  3. Collateralization:

    • The full-face par value amount, along with all accretion earnings, is fully collateralized by the insurance carrier’s guaranteed cash surrender values.

    • This ensures that the values are secure and backed by the reliable guarantees of the insurance carriers.

  4. Earnings Maintenance:

    • Accrued interest and future earnings on these assets are maintained at the same rate for the benefit of the executives.

    • This stability ensures that the executives continue to receive predictable and consistent returns on their policy assets.

This process not only optimizes the value and security of the policy assets but also provides a structured and reliable way for Credit Unions to manage their life insurance policies, ensuring long-term benefits for all stakeholders involved.

Credit Union Owned Life Insurance (CUOLI)

Midland & North American Company for Life

and Health (Fixed Account)

• Cash Value: $10,000,000 (9/30/22)

• Yield: 2.51%

• Concentration: 15% of Net Worth

New York Life (Whole Life)

• Cash Value: $5,000,000 (9/30/22)

• Yield: 5.25%

• Concentration: 7.5% of Net Worth

Retained Interest/Obligations:

Death Benefit Only Plan for Insureds Still Employed at the Credit Union = $500 K

Proposed LifeNotes Fund I Investment

Certificate Value:

• Cash Value on Transaction Date

• Par Value as of Effective Date

Estimate from provided statements:

• $15,000,000

LifeNotes Participation Certificate Class PY15:

• Participation Rate: SOFR301 + 360bps

• Duration: 15-Year Target

• February 2023 Annualized Yield: 8.13%

• Securitized Spread from pooled mortality

Retained Interest/Obligations:

Death Benefit Only Plan for Insureds Still Employed at the Credit Union = $500 K

Pooling Result:

Cash Value: $15,000,000 (from provided statements)

Yield: Net increase from 3.423% to SOFR30 + 360 bps adjusted monthly on the final

business day of the month: 8.13% APY as of February 1st, 2023

Hypothetical Net Income Increase: +$53,000 for February 2023 ($95,750 vs $42,750)

Est. New Concentration on Transaction Date:

• MassMutual: 5% of Net Worth

• Guardian: 2% of Net Worth

• New York Life: 6% of Net Worth

• Pacific Life: 3% of Net Worth

•Penn Mutual: 2% of Net Worth

•Northwestern Mutual: 4.5% of Net Worth

Contact Us

A Modern Approach to Executive Compensation & Retention

791 East 3rd Street Suite 200

Boston MA 02127