LUXEMBOURG LIFE ASSURANCE SOLUTIONS

Transcription

1 LUXEMBOURG LIFE ASSURANCE SOLUTIONS HOW EFFECTIVE AND FATCA COMPLIANT ARE THEY? TOON MEYER MIAMI, 1 JUNE 2012

2 AGENDA How safe is my money? How compliant is my structure?

3 THE EURO CRISIS Reflects: Governments: federal, regional, local Companies: public and private Private households Impacts: Banking systems Insurance sector Pension industry

4 100 million Approximate size of the bonuses received by CEO's of big banks during the financial crisis. "Whoever controls the volume of money in any country is absolute master of all industry and commerce." James A. Garfield, President of the United States Source:

5 Source: 2 billion - a truck load of cash Greece's budget deficit is 24,125,000,000. Greece will need to borrow 12 of these trucks this year full of 100 Euro bills in order not to bankrupt. "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." James Madison

6 Source: billion - amount borrowed from Banks by Governments of bankrupting countries 560,410,000,000 - Greek, Irish, Italian, Portuguese & Spanish governments borrowed little over half a trillion euros from the banks shown below. Each bank on the list lent over 10 billion to GIIPS. Now the banks are worried they will not get the money back. For the curious: the information comes from the European Banking Authority's Stress Tests and is entitled: "Results of the 2011 EBA EU-wide stress test: Exposure to sovereign debt (central and local governments).

7 Source:

8 THE DEUTSCHE BANK 2012 BANKRUPTCY REPORT The worst is probably still to come in the next 5 years. Portugal: 70% credit Ireland, Spain, Italy: 30% to 50% Belgium, France and Austria: decisive Impact on the rest of Europe and It is not going away and the sooner we deal with it, the better!

9 HOW DO WE DEAL WITH IT? Not a problem - business as usual? Big problem - total melt down? Responsible response - recognise the risk! Inform the end client - avoid the blame! Secure the end client - take the initiative!

10 WHY TAKE AN UNREWARDED RISK? 1. Get the money out of the country - now! 2. Look for maximum investor protection

11 Luxembourg State Regulator Commissariat aux Assurances (CAA) Legal separation of investor assets and shareholder assets Strongest investor Protection regime in Europe Lombard International Assurance S.A. Approved Custodian Bank All client assets held by approved independent custodian bank

12 WHY TAKE AN UNREWARDED RISK? 1. Get the money out of the country - now! 2. Look for maximum investor protection 3. Steer towards safe investments 4. Monitor compliance and effectiveness

13 FATCA & LIFE ASSURANCE Life assurance with a cash value is in scope Luxembourg life companies are FFI s Passthru payments are in scope Bilateral agreements between US Treasury and L/CH?

14 FATCA & LOMBARD Inaction is not an option Lombard s policy regarding US persons Becoming a participating FFI Dealing with US beneficiaries

15 CASE A DESCRIPTION Client Family situation Investment Concerns Solution Lives assured Life cover Custodian bank Underlying investment Investment manager 67 year-old Mexican entrepreneur 48 year-old wife, 2 children, son and daughter in their early 20s. Client concerned about who they will marry, especially the daughter. Age difference is also a concern Several accounts in the US and Europe. Active trader using leverage in his accounts for opportunistic investments The client wants a compliant and tax-efficient solution for all his different investments; he wants to maintain control Upon his death he would like his wife to take over the policy, followed by his children once his wife passes away Life assurance policy with multiple lives assured and transfer of rights. Enforcer or Protector may be appointed. Wife named as irrevocable life assured Client, wife, 2 children 101% of policy value; no need for a medical examination ABC Bank, an American Bank in Geneva Tailored to client s needs Singapore PIC managed by ABC Bank. Underlying assets in US & Europe LLC controlled by the client

16 CASE A SUCCESSION PLANNING Transfer of rights / Cesión de derechos Transfer of rights / Cesión de derechos Policyholder / Contratante Lives Assured / Asegurados Beneficiaries / Beneficiarios Policy continues as long as there are surviving lives assured. Wife named as irrevocable life assured. Enforcer or Protector may be appointed. Limited Power of Attorney issued for trading purposes.

17 CASE STUDY A

18 FATCA IMPACT CASE A Identification of US account holders Policyholders and irrevocable life assured at outset: KYC / AML US indicia W9? W8-BEN? W8-IMY? No indicia; not a US person Beneficiaries identified at payment stage or maturity: US identification of the children and the wife No indicia; not a US person

19 CASE B DESCRIPTION Client Family situation Investment Concerns Solution Lives assured Life cover Custodian bank Underlying investment Investment manager 57 year-old Mexican resident who has his business in Mexico Wife, a son and a daughter The client has several accounts in different jurisdictions (US, UK, Europe) in his own name. Client owns, through a Panama PIC, a 120-foot yacht. He wants to include the yacht in his asset transfer plan The client wants a compliant structure to organise his succession for his wife and children who have moved to the US Life assurance policy where he is policyholder, the client is sole life assured and his wife and children are beneficiaries Client 101% of policy value. No need for a medical examination XYZ, a Swiss Bank in Luxembourg Several accounts held by a Bahamas PIC managed by DEF, a German Bank. In order to have accounts in the US, there is a need to interpose a PIC. LLC controlled by the client

20 CASE STUDY B Policyholder / Contratante: Client Life Assured / Asegurado Beneficiary / Beneficiario: Dinasty Trust Beneficiaries / Beneficiarios: US residents

21 CASE STUDY B LLC Investment Manager Yacht

22 FATCA IMPACT CASE B Identification of US account holders Policyholder identified at outset: KYC / AML US indicia W9? W8-BEN? W8-IMY? No indicia; not a US person Beneficiaries identified at payment stage: Look through to the ultimate beneficiaries US indicia for children and wife! Documented (W9) and reported as US persons

23 HOW COMPLIANT IS MY SOLUTION? Life assurance is an institution Addresses the core values of the family Has proven to be effective over time Is already FATCA-compliant today Robust future since geared on civil law

24 HOW SAFE IS MY MONEY? The Luxembourg policyholder protection regime offers maximum investor protection against: Bankruptcy Fraud Third party seizure Selected Luxembourg insurance companies: Completely independent Absolutely no investment risks No wrappers or non-profitable policies Solvency II capable

25 THANK YOU Toon Meyer, Senior Marketing Director Tel: Fax: Lombard International Assurance S.A. Société Anonyme Head office: 4, rue Lou Hemmer L-1748 Luxembourg Grand-Duché de Luxembourg

26 DISCLAIMER This presentation was produced by Lombard International Assurance S.A. ( Lombard ). Its content is intended for informational purposes only and is not to be construed as a solicitation or an offer to buy or sell any life assurance product. Neither is the information contained herein intended to constitute any form of legal, fiscal or investment advice. It should therefore only be used in conjunction with appropriate independent professional advice obtained from a suitable and qualified source. No representation or warranty, whether express or implied, is made in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning Lombard or its group companies. All information in this presentation is based on Lombard s understanding of the laws of Luxembourg and of any other jurisdiction referred to herein, as in force at the date of this presentation. Lombard is not liable for the consequences of any change in law or revenue practice arising at any time close to or after the date of the presentation. Lombard is a member of the Friends Life group and its head office is registered at 4, rue Lou Hemmer, L-1748 Luxembourg, Grand-Duché de Luxembourg, telephone Its registered branch office is located at Rämistrasse 8, CH-8001 Zürich, Schweiz, telephone Lombard is regulated by the Commissariat aux Assurances, the Luxembourg insurance regulator and, exclusively for its Swiss branch office, by the Swiss Financial Market Supervisory Authority (FINMA) in Switzerland. Copyright 2012 Lombard International Assurance S.A. This presentation may not be reproduced in whole or in part or circulated to persons other than the attendees of this presentation without Lombard s prior written consent.

27 LOMBARD INTERNATIONAL ASSURANCE S.A. Société Anonyme Head office 4, rue Lou Hemmer L-1748 Luxembourg Grand-Duché de Luxembourg Tel Fax R.C.S. Luxembourg No. B37604 IBLC LU Zurich branch Rämistrasse 8 CH-8001 Zürich Schweiz Tel Fax Geneva office Place du Molard 5 CH-1204 Genève Suisse Tel Fax Member of the Friends Life group