securing your future since 1919 howard sharfman president 500 west madison street, suite 2700...
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Securing Your Future Since 1919www.schwartzbrothers.com
Howard SharfmanPresident500 West Madison Street, Suite 2700Chicago, IL 60661O: 312.683.7152F: 312.759.4452C: [email protected]
April 17,2013
FOR AGENT USE ONLY
Case study
• Case study one – managing a WL portfolio and IUL
• Case study two – insurance as an asset class• Case study three – insurance protecting a
concentrated position
Client One
• Client 56M - UHNW – PR/NS• Capacity issues with Placement• Managing large WL portfolio for 10+ years• Concerned with Interest Dividend rate
declines• Wants to maintain high CV• Interest in and has had good experience with
Structured Notes• Long Term Player
Client
BEFORE AFTER moving basis to 3 IUL's at 6.25%
Cash Value Current NLV Death Benefit NLV Proposed CV NLV /New
Coverage Index @ 6.25% Proposed DB NLV/New
Coverage Index @ 6.25%
Today $ 19,416,000 $ 73,700,000 $ 18,000,000 $ 88,000,000
Year 15 $ 41,029,000 $ 74,250,000 $ 40,125,000 $ 88,000,000
Year 20 $ 49,773,000 $ 76,770,000 $ 48,500,000 $ 89,150,000
Age 81 $ 59,634,000 $ 81,300,000 $ 57,200,000 $ 92,875,000
Age 91 $ 78,154,000 $ 91,400,000 $ 76,273,000 $ 99,105,000
Reasons to change coverage
Diversify carriers and crediting strategy Similar illustrated cash value
Significant increase in Death benefit Concern over interest rate declines
Internal document - please review company provided illustrations showing guarantees and policy charges. Numbers rounded
Client Two
• Large Private equity fund manager• Age 55• Has never purchased life insurance• $1B+ net Worth• Gifted $5mm to IDGT• Loaned $45mm to IDGT• Trust purchased carried interest units in fund• Trust purchased $50mm of GUL/UL – asset
allocation of $10mm of premium
WHY?
• Leverage• Non correlated asset Predictable• IRR at age 85 = 6.14% @ 90= 5.00% • Arbitrage between DB IRR and AFR• Asset allocation to tax free, estate tax free
product• Exit through liquidity of carried interest
Next Steps
Similar transaction on life of wife
Client Three - Concentrated stock
• Client 40’s with new found wealth from IPO• IPO at $15 moved to $40/share in 3 weeks• Reallocate shares to Life insurance as a
stabilizing factor in portfolio• Selling $5mm of shares provides $4mm after
tax • Allocating $4mm to SUL provides $65mm of
Death Benefit (16.2 x Premium)• Share price would have to be $389/ share to
equal life insurance value