In the NCFC model, dealers acquire preferred, non-voting shares in an offshore reinsurance company, typically domiciled in jurisdictions like the Turks and Caicos Islands. While dealers benefit from the company's profits, they do not have direct control over its operations or investment decisions, which are managed by the company's board of directors. This structure allows dealers to focus on their core business activities while still participating in the financial gains of reinsurance.

Unlike Controlled Foreign Corporations (CFCs), NCFCs do not have annual premium thresholds, making them suitable for dealerships with substantial F&I product volumes. Additionally, NCFCs are generally not subject to U.S. federal income tax, though they may incur a 1% federal excise tax on net written premiums. This tax structure can offer financial advantages, especially for dealers looking to maximize their profit participation without the complexities of U.S. tax filings.

By participating in an NCFC, dealers join a collective of multiple dealerships, which helps spread and mitigate risk. This shared ownership model provides stability, as the performance of the reinsurance company is not solely dependent on a single dealership's F&I product performance. Such diversification can lead to more consistent returns and reduced volatility in profit distributions.​

The NCFC structure is best suited for large or multi-location dealerships seeking a hands-off approach to reinsurance profit participation. If you're looking to benefit from underwriting and investment profits without the responsibilities of managing a reinsurance company, the NCFC model may align with your goals. At ARC, our experts are ready to guide you through this program and help determine if it's the right fit for your dealership's financial strategy. Contact ARC today to explore how the NCFC Reinsurance Program can enhance your profitability.​