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Understanding the Different Types of F&I Reinsurance

Introduction: Why I Believe F&I Reinsurance Matters for Dealers

Structuring profit participation in F&I: Retros, CFC's, NCFC's, Super CFC's, DOWCs
Over the years, I have seen firsthand how F&I reinsurance can transform a dealership. What begins as a profit center in the finance office can become a long-term wealth engine when dealers take ownership of the underwriting profits from their F&I products. The key is understanding the different structures available and knowing which one fits your dealership’s size, goals, and future ambitions.

Retro Profit Sharing Programs

For many dealers I have worked with, retro profit sharing is the first step into profit participation. A retro program allows you to share in underwriting profits without having to form your own reinsurance company. It does not require upfront investment, which makes it a great introduction. While it is not as lucrative as other structures, it helps dealers start to see beyond just the monthly profit and toward long term potential.

Controlled Foreign Corporation (CFC)

A Controlled Foreign Corporation is where most dealers really begin to unlock the benefits of reinsurance. By setting up a reinsurance entity offshore, typically in places like Turks and Caicos or Nevis, you are able to capture underwriting profits and investment income while also benefiting from favorable tax treatment under Section 831(b). I have found that for many dealers, this is the natural next step after retro programs.

Super CFC Reinsurance Program

The Super CFC Reinsurance Program is an advanced structure that gives dealers more flexibility than a standard CFC. Unlike traditional CFCs, a Super CFC uses retail cost accounting, which creates additional tax advantages by generating net operating losses (NOLs) in the early years and deferring corporate tax liability.

Another key difference is that the Super CFC allows more premium to be ceded into the company than a standard CFC. This opens the door for higher reserves, greater investment opportunities, and larger equity growth.

But this structure is not a fit for every dealership. It is best suited for high volume operations looking for a strong alternative to a Dealer Owned Warranty Company. While a DOWC offers maximum control, it also requires more infrastructure and licensing. For many dealers, the Super CFC strikes the balance—providing scale, flexibility, and control without the complexity of running a full warranty company.

Non-Controlled Foreign Corporation (NCFC)

When I talk with dealer groups or large operations, an NCFC often comes up. It pools production from multiple dealers, which spreads risk and removes premium caps that can limit growth in a CFC. While you give up some individual control, you gain strength in numbers, and that can make an NCFC the right choice for larger groups that want scale and stability.

Dealer Owned Warranty Company (DOWC)

A Dealer Owned Warranty Company (DOWC) is the most advanced structure, and it is one I get really excited about for the right dealers. With a DOWC, you own the warranty company itself here in the United States. This gives you full control, brand ownership, and the ability to capture not just underwriting profits but also retail margins. It is more complex and requires more oversight, but for dealers with the right production and vision, it can be the ultimate tool for building equity and control.

My Perspective on Building Wealth Through F&I Reinsurance

For me, reinsurance is not just about profits. It is about control, legacy, and stability. I have worked with dealers who started small and are now building wealth that will sustain their businesses and families for generations. Whether you are just beginning with a retro, stepping into a CFC, exploring the flexibility of a Super CFC, or considering the advanced power of a DOWC, reinsurance is one of the most important tools you can put to work in your dealership.


At Elite FI Partners, I am committed to helping you not only understand these programs but put them into action in a way that helps you grow, protect, and dominate in your market.

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