
Profit participation programs
Set your sights on future growth and financial security
Wealth-building profit participation plans to fit your dealership
In a competitive industry where sales and repair/services revenue can fluctuate, profit participation programs can help auto dealers generate additional income that gives their business more stability. These programs can be a valuable way to boost your dealership’s overall wealth strategies.
Zurich offers plans to fit the various needs of dealerships, including two reinsurance programs and two non-reinsurance programs. Informed reviews from our National Reinsurance Executives and Regional Finance Executives can help manage and maximize your profitable portfolio. Our consultative approach provides you with all the details, so you’re empowered to make the best decision for your business.
Make the most of your F&I product sales!
Profit participation reinsurance programs available
Producer-Affiliated Reinsurance Company (PARC)
Also known as a Controlled Foreign Corporation (CFC), the PARC program is the most common structure in the marketplace. It’s easy to set up, flexible and has a minimal amount of tax risk. The dealer chooses the company name, directors, officers and shareholders. There is a choice of three investment portfolio options and the maximum premium limit can go higher if more than one PARC can be set up for the same dealership group — a common practice for family-owned business. Most dealerships qualify for the PARC structure.
Non-Controlled Foreign Corporation (NCFC)
If a dealership is limited in the number of PARCs it can set up, the NCFC may be a good alternative. An NCFC is a corporation domiciled typically on an offshore island. The dealer is a shareholder but has limited control over the corporation and, though not subject to federal income tax, is responsible for a federal excise tax of 1% of net written premium. While there is considerably less control than a PARC, an NCFC has no annual premium limit.
Non-reinsurance profit participation programs available
Dealer-Owned Warranty Company
A Dealer-Owned Warranty Company is a U.S.-registered service contract provider. Zurich acts as an administrator, but the dealership owns the business and is contractually obliged for warranties on the F&I products under those agreements. Capital investment requirements are higher than a PARC or NCFC and earnings are subject to greater taxation, however dealers retain all underwriting profits and investment income. This can be a good option for businesses reluctant to be involved in reinsurance.
Contingent Commission (Retro) Plan
In this program, dealerships participate only in bottom-line profit on F&I product sales and distributions are recognized as ordinary income, not at the tax-beneficial capital gains rate enjoyed within the other programs. Advantages for dealers include that it requires no upfront money and has little risk beyond sales fluctuations.
Your Zurich representative can provide more information on these profit participation programs, including an overview of the benefits and risks involved with each, so you can select the structure that works best for where your business stands today…and where you see it headed tomorrow.

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