Prepared Exclusively for: Date:
Building Relationships
www.PortfolioReinsurance.com

Portfolio Group Management is a consortium of the automotive industry’s leading financial management and insurance companies.
WE ARE A TRUE INDEPENDENT INTERMEDIARY REPRESENTING YOUR BEST
INTERESTS WITHOUT BIAS OR CONFLICT OF INTEREST. REINSURANCE IS ALL WE
DO. FORMED BY DEALERS…………FOR DEALERS!
Since our inception Portfolio has created, invested and grown wealth and assets in excess of
$1 Billion for our dealer clients... Making us the world’s largest automotive industry reinsurance manager.
• Maximize profit. Minimize risk.
• Create substantial personal wealth.
• Increase dealership profitability.
• NOT an experiment – Since 1989
• IRS audited, reviewed, tested, and approved (Portfolio ONLY!)
• Dealership customization for every dealer
• Dealer owned and controlled – by you!
• Grant you, as the owner, all of the control and rights of ownership you deserve
• Portfolio administrates all functions for your Insurance Company (tax returns, charters – licenses, compliance, claims and management) www.PortfolioReinsurance.com
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• Capture significant new revenue (turn an expense, currently into a substantial asset you own!)
• 100% of Underwriting Profit & Investment Income in ARC (your Affiliated Reinsurance Company) is yours!
• Access to capital through loans of your ARC’s funds (no fees) – pay yourself interest on your loan
• Cash reserves managed in your financial institution of choice
• Reduce taxes and provide long term accrual of wealth in a lower tax advantageous environment
• Flexibility of F&I Product offerings - brand and distinguish you from your competition
• Estate planning benefits – structure - multiple ownership scenarios
• Exit strategy and key employee retention opportunities
• Portfolio administrates all administration functions (claims, tax return, compliance, insurance charters) www.PortfolioReinsurance.com
3

• Where will my reserves be held?
All funds are held in your financial institution, with your investment broker/manager (this eliminates any conflict of interest). Portfolio and you are co-trustees.
• Who will direct the investments, and what types of investments will be chosen?
You have 100% control, acceptable investments include: floor plan offset account (loans), individual stocks, bonds and mutual funds. Portfolio issues to your broker an investment policy statement or “Rules to Invest
By” (guidelines).
• Can I loan funds from my ARC?
You can make loans of 100% of your earned premium and 75% of unearned premium.
• Can I deduct claims and cancellations up front?
Your dealership nets claims and cancellations prior to remittance (this eliminates Accounts Receivable float and fraud). This drastically improves your cash flow.
• How quickly will you fund my reinsurance company? How often?
Your company is funded 5 business days after receipt and as often as weekly (this will maximize your investment income potential).
www.PortfolioReinsurance.com
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• How will you protect my reinsurance company assets?
We set up actuarially proven reserves to ensure profitability and reinsured products are “firewalled” into separate, stand-alone trust accounts, with no commingling or off-set.
• What kind of underwriting review and risk analysis are available?
You are provided a detailed analysis of your company’s performance by reinsured product and analyzed at every level including production, claims, investment, and interest income. Quarterly, in person reviews track and manage your insurance company quarterly and from inception. (Best in the industry.)
• How will you impact dealer profitability and support our F&I initiatives?
You have F&I income development partner/professionals in your dealership constantly training and supporting sales initiatives.
• How do you enhance service retention and fixed operations?
Service retention is guaranteed through a 40 mile tie-back. Portfolio directs your customers back through to your service department (90% + return to your dealership for repairs).
• Are there hidden fees?
NO Hidden Fees, No Loss Adjustment Expense, No Additional Portfolio Investment Management Fees, No
Loan Fees, No Loss of Investment Income. You keep full control, we meet with you, suggest actions and provide management guidance and execute your decisions and directives. No personal or dealership guarantees required.
www.PortfolioReinsurance.com
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• Vehicle Service Contracts
• Gap
• Maintenance Programs – fully customized
• Reward Programs: Engines for Life
• Certified Used Vehicle Programs (Your own Certified “CPO”
Plan) for all brands
• Paint & Fabric Warranties (Cilajet, Xzilon)
• Code/Etch Theft Products
• Dent Defense (Paintless Dent Repair)
• Windshield Glass Defense
• Express 5 (Dent Repair, Roadside Assistance, Tire & Wheel,
Windshield Repair, Key Replacement)
• SelectShield (3 month, 3,000 mile Powertrain
Warranty for used vehicles)
• Tire & Wheel Protection
• Key Replacement
• LoJack Theft Product
www.PortfolioReinsurance.com
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• Duties
• Sell All F&I Products
• Benefits
• 100% commission to dealership on all product sales
• Dealer overrides allowed
• Net remit of claims and cancellations
• Claim override ability and involvement
VSC
Dealer Cost
Dealer Profit
$1,500
($900)
$600
• Duties
• State Compliance
• Premium Tax
• Policy Issue
• Lender Approval
• Bears Legal
Responsibility
• Reserve Posting
• Underlying
Insurance
• Stop Loss
Dealer Cost
Ins. Fee
Premium Taxes
$900
($ Fee)
($ Taxes)
• Duties
• Tax Returns
• Cession Reports
• Record Keeping
• Financial Consulting
• Financial Statements
• Claims Adjudication
• Risk Analysis
• Loan Administration
• Coordinate Trust
Account Deposits
DEALER REINSURANCE
COMPANY
• Duties
• Annual Board Meeting
• Benefits
• TAXED ONLY ON
INVESTMENT INCOME
• 100% INVESTMENT
INCOME
• 100% UNDERWRITING
PROFIT
• LOWER FEDERAL & STATE
PERSONAL TAX RATES
Dealer Cost
Fees
Net Premium
$900
($ Fees)
$$$ www.PortfolioReinsurance.com
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• Duties
• Sell All F&I Products
• Benefits
• 100% commission to dealership on all product sales
• Dealer overrides allowed
• Net monthly claims and cancellations from current months remittances
• Duties
• State Compliance
• Premium Tax
Payments
• Policy Issue
• Lender Approval
• Bears Legal
Responsibility
• Reserve Posting
• Underlying
Insurance
• Stop Loss
• Duties
• Tax Returns
• Cession Reports (QTR)
• Record Keeping
• Financial Consulting
• Financial Statements
• Turnkey Management
• Risk Analysis
• Claims Adjudication
• Dealer overrides for customer CSI if needed
Portfolio Group
Management
First Extended or
Protective (Elite)
(Contract and Claims
Administrators)
Portfolio
(Reinsurance
Administration) www.PortfolioReinsurance.com
• Duties
• Annual Board Meeting
• Benefits
• 100% INVESTMENT
INCOME
• 100% UNDERWRITING
PROFIT
• LOWER FEDERAL & STATE
PERSONAL TAX RATES
• TAXED ONLY ON
INVESTMENT AND
INTEREST INCOME
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Dealership Sells
F&I Products
-Service Contracts
- Gap
- Credit Insurance
- V.I.N. Etch Theft Benefits
- Paint & Fabric Warranties
- Tire & Wheel Protection
- Maintenance Programs
- Loyalty Programs
- Key Replacement
Total Turnkey Management
Insurance Carrier Provides:
- Underlying Insurance
- State compliance-
- Legal Responsibility
- Lender Approval
- Premium Tax, Policy Issue
- Reserve Posting
Administrator Provides:
- Record Keeping
- Financial Statements
- Risk Analysis
- Tax Returns
- Financial Consulting
- Cession Reports, Turnkey
Management
A Second Chance to Sell to Customers
- Direct mail - Call Center
Dealer's Reinsurance Company
Accepts Reserve
Dealer's Reinsurance
Company Pays Claims
Portfolio Audits, Verifies &
Processes Claims
Customer Is Directed
Back to Your
Dealership for
Repairs
Portfolio Processes And
Disburses Fees and
Reserves
Dealer Reinsurance
Company Retains
100% Investment Income
100% Underwriting Profit
Low Federal & State Tax Rates www.PortfolioReinsurance.com
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VEHICLE
SERVICE
CONTRACTS
GAP
TIRE &
WHEEL
VIN
ETCH/
CODE
CHEMICALS
MAINTENANCE
Dealer Reinsurance, Ltd.
VSC
TRUST
ACCOUNT
GAP
TRUST
ACCOUNT
OTHER RESERVES
TRUST
ACCOUNT
OTHER RESERVES
TRUST
ACCOUNT
OTHER RESERVES
TRUST
ACCOUNT
OTHER RESERVES
TRUST
ACCOUNT www.PortfolioReinsurance.com
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Profit Opportunity
Portfolio Service Contracts
Express Autogap
Express Care Chemicals
Xzilon, Cilajet, etc.
Express “5”
Tire & Wheel
Key Replacement
Express Code/Etch
Dent Defense
Maintenance
Premium Opportunity
$850
$150
$75
$275
$250
$125
$50
$225
$400
Loss Ratio
40%
52%
2%
65%
60%
50%
6%
50%
60%
Underwriting
Profit*
$510
$72*
$74*
$96*
$100*
$62*
$47*
$113*
$160*
www.PortfolioReinsurance.com
11

www.PortfolioReinsurance.com
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AVERAGE VSC PREMIUM AVERAGE LOSS RATIO TAX RATE
$850
(Net Deposit to Reinsurance Co.)
40% OF $850 = $340 (claims)
Underwriting Profit
$850-$340 (claims) = $510 Profit
Underwriting Profit is Exempt!
AVG. VSC PREMIUM
$850
(Net Deposit to
Reinsurance Co.)
INVESTMENT
INCOME OVER
5 YEARS
TAX ON
INVESTMENT
INCOME ONLY
EFFECTIVE
TAX RATE
+ $130 Profit*
(4% Return)
35% Tax Rate**
= $45 Tax
*New vehicles have NO claims for 3-5 years!
**US Federal “C” Corp
Tax Rate
($45 Tax / $640 Total
Profit) www.PortfolioReinsurance.com
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Domicile of economic convenience affords flexibility, low capitalization costs, and a more favorable regulatory environment. Electing & Filing under U.S. Treasury Code 953D your reinsurance company will be:
• United States Taxpayer - Filing a U.S. Tax Return Annually
• No Foreign, Offshore Bank Accounts
• No Foreign Corporation Reporting Requirements
All reinsurance company assets are invested in the United States at the discretion of the dealer in your selected financial institution and financial manager.
Portfolio Utilizes the following domicile: Island of Seychelles
Portfolio is the only IRS tested and approved Dealer Reinsurance Program that has received favorable rulings from the US Treasury Department. (IRS) 2002 Audit
Portfolio Structure is a Controlled Foreign Corporations, or CFC www.PortfolioReinsurance.com
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Taxable Earnings
Income
Tax Base - Profit
Normal Tax Rate
Taxes
Maximum Effective
Tax Rate
General Business
Typical
Dealership
“S” Corp
$400,000
$400,000
38.6% Max Federal Rate
Plus State Tax
(0 to 15%)
$214,400 (53.6%)
Premium Flow
$0 - 1.2 million per year
$360,000 Underwriting Profit
$40,000 Investment/Interest Income
$400,000 Total Reinsurance Company Profit
$40,000 Investment Interest Income
Underwriting Profit is Tax Exempt ($0)
35% “C” Corp Rate on Investment/Interest
Income Only
$14,000
38.6% Max Federal
Plus State Tax
(0-15%)
• Tax is on 35% of Interest or Realized
Investment Income Only
• Federal Effective Tax Rate Will Be Less
Than 9% & No State Tax
• Qualifies for Lower US Dividend Rate Long
Term Capital Gains (20% Personal)
• You Elect When to Take Your Dividends!
www.PortfolioReinsurance.com
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FOR IMMEDIATE RELEASE
Portfolio Reinsurance Management Receives Favorable Rulings from Internal Revenue Service
(Irvine, CA) A recent ruling by the Internal Revenue Service marks a significant victory for the portfolio program and its participants. The IRS ruled favorably as to all aspects of the Portfolio program that it reviewed, including purpose, structure, operation, and management.
Responding to reports of possible abuse of reinsurance programs, the IRS began investigating several programs and individual reinsurance companies in 2002. By the end of 2002, the IRS issued Notice 2002-70, in which certain reinsurance programs were deemed “ listed transactions ” , meaning that they were subject to mandatory disclosure provisions under tax shelter rules. (Notice 2002-70 was effectively rescinded recently in notice 2004-65; reinsurance programs are no longer “ listed transactions.
” )
Portfolio was among the programs subjected to IRS examination. Various challenges were raised by the IRS investigators. Portfolio produced thousands of documents and spent countless hours responding to IRS requests. Ultimately, the investigators and Portfolio agreed to request a
Technical Advice Memorandum (TAM) on three key disputed issues from the National Office of the IRS.
The TAMs were released to the public on December 31, 2004. They represent a complete validation of the Portfolio Program.
The first issue considered by the TAM is whether the reinsurance company participating in the Portfolio Program qualified as an insurance company for tax purposes. The National Office considered the issues and concluded that the company qualified as an insurance company.
The second issue was a technical question about the eligibility of the reinsurance company to make an election to be treated as a domestic company under section 953(d) of the Internal Revenue Code; the National Office ruled that the company was eligible to make that election.
The third issue was whether the arrangements constituted a sham. The National Office ruled unequivocally, “ The arrangements at issue were not a sham for federal income tax purposes.
”
Andrew J. Weill, attorney for the taxpayers in the case, states that the TAMs are important on several levels. “ It ’ s a clear ruling that the reinsurance concept is valid. It ’ s also a strong vindication for the Portfolio program that was scrutinized.
Weill ’ s comments emphasize the importance of choosing the right program. “ This ruling doesn ’ t mean that all reinsurance programs are valid, and individual companies aren ’ t excused from compliance with the law. But this ruling means that properly run reinsurance programs - such as the one in the TAMs [Portfolio] - can offer their participants a much greater degree of confidence in their decision.
” www.PortfolioReinsurance.com
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Regarding the IRS TAMs (Technical Advice Memoranda)
Portfolio dealers have their rights of ownership, but that does not mean anything goes. Reinsurance companies must be managed and operated to be proper and correct, and in compliance with Federal regulations and tax laws.
Portfolio reinsurance companies are loyal US taxpayers. There is no off-shoring of funds or risk . Our companies have a legitimate business purpose, and are a superior way to create a win-win-win situation for 1) the dealership's customers, 2) the dealership as a business, and 3) the dealer as owner.
For these and other reasons, the IRS issued two favorable Technical Advice Memoranda after an extremely expensive and thoroughgoing two-year review of Portfoliomanaged reinsurance companies. We paid the high cost of complying with the IRS inquiry because we believe in our business concept, its value to dealers, and because we have always made every effort to be proper and correct.
The TAMs appear to be a general guideline. So since the release of these TAMs many companies have started offering reinsurance programs to dealers. The perception is that any kind of reinsurance company would survive a similar investigation. Having directly witnessed everything the IRS scrutinized, and having seen how other providers operate, we would urge caution when shopping for a reinsurance program.
Disclosures
1. Defining Reinsurance
For purposes of Federal tax law, the Portfolio program ’ s structures must be considered reinsurance companies and are treated as such under the Internal Revenue Code. At the same time, many states and other jurisdictions do not classify these companies as “ insurance ” or “ reinsurance ” companies. For clarity we will continue to refer to them as reinsurance companies. Prospective clients in any of the 50 states are eligible for Portfolio reinsurance management services.
2. Investment Control
While you, the reinsurance company owner, will be in control of your company ’ s investments, your results will be based on your individual choices, business experience, expertise, as well as the market conditions and economic realities. Portfolio reinsurance management includes investment policy guidelines that provide prudent bounds for your company ’ s investments.
3. Investment Performance
Of course, there are no guarantees concerning the profitability you may experience. The past performance of Portfolio ’ s clients is no guarantee of your own results. Portfolio cannot guarantee your company ’ s future results or success.
4. Our Record of Achievement in Numbers for the Dealer Owner
Portfolio companies have enjoyed excellent earned loss ratios, healthy investment income returns, and substantial after tax profits since 1990. Dealer/owner control of the reserve accounts and the investments means that you are in control of the profits your company achieves. Portfolio provides the expertise to assist you in achieving your profit goals.
There are no guarantees concerning the profitability you may experience, and past performance of Portfolio ’ s other clients is no guarantee of your own results. Portfolio cannot guarantee your future results or success. At the same time, we will be happy to share with you our historical records, dating from 1990 to the present, on over 700 Portfolio reinsurance companies ’ performance. Once you review these facts, we believe that you will conclude that becoming a Portfolio dealer is a prudent business choice.
5. Loans Disclosure
The Portfolio program allows dealers to make loans from their trust accounts as part of a balanced investment portfolio and subject to approval by Portfolio. We take pride in our proper and sophisticated loan management services. Please ask for more details when you contact us.
6. More about the IRS TAMs
Two Portfolio Program clients were examined by the IRS, during which time they were subjected to a multi-pronged, two year review by the Service. At the conclusion of the examination, the Service published two Taxpayer Advice Memoranda that exonerated the Portfolio clients entirely. While the Internal Revenue Code section 6110(k)(3) states that the
TAMs may not be used or cited as precedent, the fact remains that the Portfolio program has undergone extensive review by the IRS and its clients came out unharmed. To Portfolio ’ s knowledge, no other similar program can boast the same success.
www.PortfolioReinsurance.com
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www.PortfolioReinsurance.com
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www.PortfolioReinsurance.com
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• To provide the retail automobile, RV and Power Sports dealer with the best possible structure to grow personal wealth outside the dealership and provide exceptional service to the client
• To successfully grant the dealer / owner 100% control over all of the ownership aspects of their Reinsurance Company. The ultimate goal is to maximize profit and investment returns, while minimizing risk.
Additional wealth provides security and provides long term growth. We strive to maximize every possible product profit opportunity through meticulous attention to detail and exceptional reporting and consulting. We strive to drive the profit and your organization, along with your Reinsurance Company more efficiently each month. We will take every opportunity to increase your income and wealth, while reducing your personal income taxes.
www.PortfolioReinsurance.com
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• 100% ownership of your own reinsurance company
• 100% underwriting profits
• 100% investment income
• All F&I and aftermarket products are reinsured
• Create higher service departments revenues
• Lower personal tax rates
• Portfolio provides objective third party claims adjudication
• Quarterly paid claims analysis
• Quarterly loss ratio analysis
• Quarterly production analysis
• Rate analysis (on-going)
• Dealer chooses full reimbursement rate
• Customer is directed to your dealership
• On-line claims payment
• 100% error-free online contract rating
• Net-Net remit processing
• Weekly business reinsurance funding
• Ability to access capital through loans of your funds in your Reinsurance Company
• Quarterly cession reports
• Complete record keeping, annual book and records
• Charter establishment and renewals
• Annual tax return preparation
• Loan facilitation, documentation and tracking
• Insurance company compliance www.PortfolioReinsurance.com
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$_______
$_______
$_______
$_______
» Pays First Extended Service Corporation to administrate dealer/VSC claims
» Pays Income Development Partner to service and manage dealership production and training (F&I)
» Pays Portfolio for your Reinsurance Company’s management coordination and quarterly cession reports/financials
$_______
(9.75% of F&I cost) (optional 5% additional for stop loss)
(7.25%)
(2.50%)
» Insures customer contracts as front carrier (admitted and approved)(Virginia Surety)
» Pays premium tax to State
$_______
(deposited in 5 business days) www.PortfolioReinsurance.com

One Time*
st
st
*Capital contribution paid by owner’s personally in % proportion to Reinsurance Company stock of ownership.
Yearly
www.PortfolioReinsurance.com

www.PortfolioReinsurance.com