Investments

Citadel offers policyholders a wide range of investment options that are well suited to individual financial goals with respect to risk tolerance and investment time horizons. These options provide Citadel clients access to some of the world's top investment managers.  Specific investments decisions are made by the investment manager, which ensures compliance with Internal Revenue Code provisions that forbid excessive investor control.

IRC 953(d) Election/ FDAP and FIRPTA

IRC 953(d) election
Citadel, domiciled in Anguilla, British West Indies, is treated by the IRS as a “foreign corporation.” As a foreign corporation, Citadel would, in most circumstances, not be subject to U.S. income taxes. However, Citadel has elected, under IRC 953(d) to be treated as a U.S. domestic company for income tax purposes. In doing so, Citadel has chosen to be subject to U.S. income tax in order to avoid withholding requirements on the gains resulting from the sale of U.S. real property and intellectual properties by a foreign entity.

FDAP and FIRPTA
During a period when the U.S. dollar was at record lows on the world market and foreign corporations where acquiring U.S. real property and intellectual properties (including patents and royalties), Congress passed the Foreign Investment In Real Property Tax Act of 1980 (FIRPTA). Under FIRPTA, any gain on the sale of real property or intellectual properties, by a foreign person or entity is subject to U.S. income tax.

Fixed, determinable, annual or periodical (FDAP) income is also subject ot U.S. income tax. Under FDAP, the IRS can require income tax withholding on real property income, such as rent, and income from royalties.

Although the earnings on the assets inside a qualified life insurance policy are not subject to income tax, under FDAP and FIRPTA the purchaser of real property and intellectual properties would be required to withhold a percentage of the funds for the purpose of offsetting potential income tax obligations. For this reason, the purchase of real property or intellectual properties inside a life policy has become less desirable.

Conclusion
By virtue of the 953(d) election, Citadel has agreed to be taxed as a U.S company for the purposes of income taxes. Because Citadel pays taxes on its profits, there are no withholding requirements under FDAP and FIRPTA, thereby creating an opportunity for the investment in real property and intellectual properties inside a Citadel policy.

Westminster Hope & Turnberry

Citadel enjoys a close working relationship with Westminster Hope & Turnberry, which provides a family of managed investment accounts, each with its own specific investment objective and investment policy. The investment objective and policy determines the types of securities in which the fund will invest, and will affect both the investment returns and the risk to which the account is subject.

WHT may appoint an independent investment manager to direct the assets of any of the Sub-Funds pursuant to an agreement between WHT and the investment manager. WHT may, at any time, terminate such investment manager and engage a new manager.

Transfers Between Sub-Funds

Premiums may be allocated by the owner among any or all of the Sub-Funds; the policy owner may transfer amounts from one Sub-Fund to another. WHT may substitute new assets in any of the Sub-Funds in accordance with the investment objective of such Sub-Fund. All Sub-Funds are managed to meet Internal Revenue Code, Section 817(h) diversification requirements.

Greater Number of Investment Options

Unlike U.S. carriers who mass market a small group of investment options, Citadel offers virtually unlimited investment options in U.S. compliant policies.

A client may choose an investment manager who has already established a relationship with Citadel. Citadel also allows clients to recommend a money manager of their choice, as long as that manager meets Citadel’s high standards. Citadel will perform its due diligence, and if suitable, approve the manager.

Citadel offers three unique investment strategies, making its policies so flexible that they rival U.S. Internal Revenue Code compliant policies offered by other companies around the world.

Preferred

Policy owners may select from several Preferred accounts with various maturities.  The Preferred investment strategy allows the policy owner to select a low cost investment option where funds are secured by a diversified portfolio of U.S. Treasury notes and bonds, public and private stocks, corporate bonds and money market instruments.

Select

Through its mutual fund administrators, Citadel offers some of the finest international investment products available anywhere.  Through WHT Citadel provides a group of funds and fund managers with their own specific investment objective and investment policy.

Choice

Through the Choice option, policy owners may recommend any experienced money manager in the world provided that the manager meets Citadel's high standards.  The insured may submit the name of the preferred money manager.  Citadel will then conduct extensive due diligence.  If warranted, Citadel will approve the money manager and make the manager available to Citadel policy owners.

As an additional option under the Choice selection, policy owners may make a portion of their premium payments with "in-kind" or non-cash assets including existing stock and bond portfolios as well as other non-liquid assets.

In-kind Payments

As an international insurance company, Citadel may accept a portion of the premium payment in the form of “in-kind” payments. In-kind payments are payments made with non-liquid assets, defined as assets that cannot be turned into cash within 60 days. This advantage opens the door for payments to be made with a wide variety of assets, including fixed assets and private stock.

U.S. Internal Revenue Code Section 817(h)

In order to preserve the preferred tax treatment off all life insurance and annuity polices it is important that the conditions of U.S. Internal Revenue Code Section 817(h) are met at all times. (Assuming the contract is not structured as a Modified Endowment Contract or MEC) There are a number of requirements to be met, including the requirement that the underlying investments in the segregated asset account be “adequately diversified”.

Citadel shall have no responsibility or liability for any losses to the Investment Account. Citadel Insurance Company, Ltd. shall deduct the cost of investment advisory or management fees from the Investment Account.

To find out more please contact us: clientserv@citadelins.com

Citadel Insurance Company, Ltd.
P.O. Box 1162, The Valley
Anguilla, British West Indies
Phone: (264) 497-0147
Fax: (264) 497-2059
clientserv@citadelins.com