Top U.S. Bank Testimonial

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This relationship began after this client’s bank owned life insurance (BOLI) portfolio grew from $2 billion to $4 billion following a material merger. The company realized it was time to reassess the combined portfolio, evaluate its options and ultimately restructure to improve both the economics and risk profile.

According to the bank’s managing director, “We spoke to many consultants and carriers to understand what we needed to do and what type of resources were available. Our $4 billion portfolio involved 17 different carriers and a complexity of products with every bell and whistle you can imagine. If you look at all the different considerations – tax risk, credit risk, regulatory risk, reputation risk, economic and relationship issues – you have all these different dynamics and complexities that need to be managed on a parallel basis. Otherwise, you are not going to get the best result, and you can put yourself in a position to actually increasing your risk instead of mitigating it.”

It was critical for the bank and its consultant service provider to be in sync in order to maximize the result.

“What we still ended up with is still 17 different carriers, but the composition and structure is more unique, with improved economics, a lower risk profile, and increased flexibility in the future to manage the investment allocations The objective was to save money, to mitigate credit risks, to not increase tax risks, to improve investment flexibility and to make sure we were compliant from a risk management point of view, which is dictated by banking regulations.”

The bank’s major concern in restructuring “was not underestimating or having an accurate analysis of the benefits and the execution risk It was key to have a firm that we were comfortable with at all levels so we could execute the plan. We developed a great relationship with Lynch. Lynch is a breed apart from what is out there in the industry and really sets the standard for what banks and insurance companies need to do with respect to these insurance products.”

The bank initially hired Lynch & Associates to re-evaluate and restructure its portfolio, a process that took about two years to complete. Subsequently, Lynch was retained to provide comprehensive administrative, investment analytics, risk management and regulatory compliance services for the entire $4 billion asset portfolio.

“The space that they’re in, specific to the services they provide to us, is pretty unique and obscure, and because of that, it presents a significant number of challenges for both insurance carriers and banks to access.. A firm like Lynch & Associates effectively is a conduit that both carriers and banks need to access the bank-owned, corporate-owned life insurance market so we can obtain the best economic benefits and at the same time do it in a way that doesn’t introduce risk associated with the accounting and tax aspects and is also regulatory compliant. They are not just brokers. They provide a very unique service to this market space. Their business model is based on that. They are not a commission-driven shop like many of the others in the marketplace are today. They provide real value added, and that is what truly differentiates them from their competition.”

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