The objective of the pre-purchase analysis is to ensure that the financial institution understands the risks, rewards, and unique characteristics of insurance. The nature and extent of this analysis should be commensurate with the size and complexity of the potential purchase and should also take into account existing insurance holdings. A mark of a well-managed institution is the maintenance of adequate records concerning its pre-purchase analysis, usually including documentation of the purpose and amount of insurance needed. According to the Interagency Statement on the Purchase and Risk Management of Life Insurance:

"An institution should be aware that the vendor's financial benefit from the sale of insurance may provide the vendor with an incentive to emphasize the benefits of a BOLI purchase to the institution without a commensurate explanation of the associated risks. Therefore, reliance solely upon pre-packaged, vendor-supplied compliance information does not demonstrate prudence with respect to the purchase of insurance." [OCC 2004-56]

Furthermore per the Office of Thrift Supervision:

"Institution management and the board of directors cannot rely solely on a third-party analysis of the benefits of BOLI, such as one that a vendor or carrier of the product may prepare. OTS considers this an inappropriate transfer of the fiduciary responsibilities of the board and management to an outsider with a vested interest in selling product." [RB 32-26]

Pangburn will assist institution management with satisfying the following specific steps listed in the Interagency Statement on the Purchase and Risk Management of Life Insurance:

I.	Identify the need for insurance and determine the economic benefits and appropriate insurance type
II.	Quantify the amount of insurance appropriate for the institution's objectives
III.	Assess vendor qualifications
IV.	Review the characteristics of the available insurance products
V.	Select carrier
VI.	Determine the reasonableness of compensation provided to the insured employee if the insurance results in additional compensation
VII.	Analyze the associated risks and the ability to monitor and respond to those risks
VIII.	Evaluate alternatives
IX.	Document decision

As an independent third party  dedicated to ensuring continuous compliance, Pangburn provides a broad range of ongoing plan and insurance services, including quarterly assessment of the risks associated with the insurance program (e.g.,  liquidity risk, transaction/operational risk, credit risk, interest rate risk, reputation risk, compliance/legal risk, price risk), GAAP accounting for BOLI and nonqualified benefit plans (if applicable), quarterly testing for concentration of risk compliance and lending limits compliance, quarterly analysis of peer group insurance holdings, and quarterly review of carrier ratings and financial profiles.

In addition to regular reporting, Pangburn is constantly monitoring the effects of certain events on the status of the insurance. For instance, we provide automatic email notifications of change in carrier credit ratings, regular Social Security sweeps to track deceased former employees, and annual analysis of an early surrender and percentage of insured persons still employed.

Pangburn is dedicated to providing a superior client and advisor experience. We provide regular communications, particularly regarding changes in applicable tax, accounting, and regulatory issues. We are also available on demand to assist with an institution’s scheduled and unscheduled audits. Each client will have a dedicated Client Relationship Manager who is knowledgeable about the institution’s plan and BOLI purchase.