BOLI - Compliance

FCG professionals have been working in the BOLI market before the initial regulatory guidelines were issued in 1991.  We work with our clients in the risk analysis for both pre-purchase and post-purchase.  We provide a detailed risk and performance review annually as part of the compliance requirements (OCC Interagency Bulletin 2004-56).

BOLI Compliance Overview:

Regulatory guidelines require that banks complete a thorough analysis of a contemplated BOLI         purchase prior to the purchase, as well as an ongoing review and due diligence of the holdings to ensure  continued compliance throughout the period that the BOLI assets are held by the bank.

Our Compliance services assist the bank management in all aspects of the compliance process including:

  • A pre-purchase analysis of all BOLI assets acquired by the bank in conformity with the regulatory guidelines
  • Documentation of the pre-purchase analysis
  • Continued compliance with regulatory and tax rules after the purchase
BOLI Compliance - Pre-Purchase Analysis:
  • Regulatory guidelines require that banks satisfy each of the specific steps prior to the purchase of BOLI.
  • Identify the need for insurance, determine the economic benefits, and document the selection of the appropriate type of life insurance product
  • Quantify the amount of insurance appropriate for the bank’s objectives
  • Assess vendor qualifications
  • Review the characteristics of the available insurance products
  • Select the carrier or carriers
  • If the insurance results in additional compensation to the insured employee/ director determine that the compensation is reasonable
  • Analyze the risks of the BOLI purchase and the ability of the bank to monitor those risks
  • Evaluate alternatives
  • Document decision
Compliance – Ongoing Reporting:
  • Regulatory guidelines require that banks continue to monitor the BOLI asset and associated risks after the purchase.  A compliance set of reports that address the tax,accounting, and compliance reporting are provided;
  • Calculation and reporting of executive/ director benefit in accordance with proper accounting practices (FASB 106 and 87)
  • Report BOLI asset values in accordance with accounting and tax requirements (Form 8925) added by the Pension Protection Act of 2006
  • BOLI review for performance, risk, and compliance (OCC Interagency Bulletin 2004-56)