Reciprocals have been around for many years, but many times get looked over for more popular types of insurance, most notably Mutual Insurance Companies( Nationwide, Liberty Mutual) and Stock Insurance Companies(Allstate, Geico, AIG). However, in recent years there has been a rise of interest in reciprocal insurance, especially as more nonprofit groups search for the best means to insure their members without creating taxable income.
So what are reciprocals? Reciprocals are usually defined as a group of individuals, corporations or entities who, as members, agree to exchange contracts of insurance (policies) and share their insurance risks among themselves within their select group. Each member (policyholder) of a reciprocal exchange individually appoints and authorizes a common attorney-in-fact to manage the affairs of the exchange. Therefore, they are similar to mutuals except the people that manage the policies are not employees of the company, but these "attorney-in-fact's" who manage the reciprocals finances and deals with underwriting, claims administration, investments and any other day to day operations. The attorney in fact is usually paid a percentage of total profits for their service.
Reciprocals also have a "subscribers advisory committee"(SAC), which is essentially a governing board. Like the attorney-in-fact, the subscribers appoint the body of persons to become the SAC. The SAC has general responsibilities for the finances and insurance activities of the reciprocal. For instance, the compensation of the attorney in fact will usually be determined by periodic negotiations with the SAC.
As far as tax advantages, all insurance companies, including reciprocals are regarded as corporations when it comes to federal income tax purposes. This means that the insurance company is subject to the double tax that is applicable to most corporations. Therefore, income is taxed once at the corporate level and taxed again when distributed to the company's shareholders. Reciprocals, however, have a unique tax advantage over other insurance companies in that they are allowed to take a deduction for the amount of its annual net income that is allocated to the subscriber SSAs. (Subscribers Savings Account).
What is a Subscribers Savings Account? At the end of each year, the remaining premium will be deposited into the Subscribers Savings Account, which is held in the name of each active member. The company typically does not pay tax on the money deposited into the SSA accounts, allowing the surplus balance to build faster than retained earnings in a typical insurance company.
The reciprocal insurance structure has been used by groups of professionals including doctors, lawyers and architects and some industries, including pharmaceutical manufacturers, when coverage they need has become scarce and extremely high priced.
Though reciprocals represent a smaller number of insurance companies, they are a viable option and shouldn't be overlooked when searching for the right coverage for your specific needs.
Reciprocal Insurance Companies:
Pure Homeowners Insurance
Farmers
From a historical standpoint, Vietnam had always been an agricultural nation that relied entirely on wet-rice cultivation for centuries until the Vietnam War destroyed their economy. When the new government took over in April of 1975, they launched their "planned economy." This gave rise to the implementation of collectives involving economic capital, factories, and farms, which resulted in the employment of millions of people in government programs.
For over a decade, corruption and inefficiencies of state programs, poor quality of goods, and underproduction as well as restrictions on a wide array of economic activities wreaked havoc on Vietnam's economy. Additionally, the economy suffered at the hands of American and European embargoes following the war. After 1986 and the fall of the Communist Bloc, significant economic reforms helped Vietnam renovate the economy, and in the 1990's, Vietnam was experiencing an annual GDP growth of 8%.
Prominent Import/Export Aspects
Most countries have products present in their economies that were manufactured in Vietnam. Along with Vietnam's expansion into other export markets, there are numerous factors that equate to how exports have accelerated with this Southeast Asian market. There are 4 key aspects attributed to the global growth of Vietnamese imports and exports:
* Since the renovation process, (or "doi moi" as it is referred to) went into effect over a decade ago, Vietnamese export expansion has continually increased into other countries and territories. The biggest reason behind the amount of exports growing with the US was the lifting of the embargo in 1995.
* There are currently 200 countries that import a wide array of products from Vietnam, 28 of which have an annual import turnover rate in excess of $100 million, another 16 of them exceed $500 million, and 7 import over $1 billion in product with the United States on top of that list.
* Several of these markets could import significantly more product from Vietnam such as the former Communist Bloc nations, as well as several new markets - Africa, Australia, and Latin America for example.
* Of those 200 countries that have established a trade relationship with Vietnam, there has been an ongoing trade surplus with 159 of them, inclusive of Australia, Belgium, Germany, the Philippines, the UK, and the US. Conversely, there are 47 that Vietnam has always had an ongoing deficit with. China, Hong Kong, India, Kuwait, Switzerland, and Thailand are the main ones where deficits are concerned.
Steven D is a prolific writer and Managing Director at Singapore Dovalize Pte. Ltd. He is currently promoting business in Vietnam and to know more about it, check out
Vietnam business, exports and import.
Futures spread trading involves the sale of futures contract and buying more offsetting contracts.
A spread tracks the differences between the price futures you are long and the futures you are short, hence, it enables investors benefit more than they would trading in stocks or outright futures.
Spreads trading helps in spreading investment risks since you can own long futures of one kind in a given month, and own short futures of the same kind in another month; this is referred to as intra commodity spread trading.
Investors can also own long futures of one kind and own short futures of another kind which is commonly referred to as inter-commodity trading. The commodities must be related so that movement of prices of the commodities goes to the same direction.
It is easy to trade in spreads, whether you are an experienced investor or a beginner since futures spread trading is considered as a safer way of trading in futures.
Inter-market spreads require only a small margin required for total futures which helps you use your money in the most efficient way. Spread trading also offer greater returns since you are posting fewer margins for the same possible return which are usually higher.
Spreads tend to drift as compared to outright futures; therefore, they can be used to create futures positions partially. When futures drift, you make more money since the futures market is not affected by manipulation.
Spreads trading allows you to trade on a seasonal basis since trends drift on seasonal basis, thus high returns.
Futures spread trading is more predictable than trading in shares or futures trading which explains, why the margins of spreads are low. Spreads are not affected by problems related to lack of liquidity since you can trade in less liquid markets.
Commercial firms have used the spread trade to extend their hedges from on contract month to another, by so doing; they attempt to recover the costs of their inventories.
Most of trade spreads are utilized by large speculators and commercial firms since they are highly knowledgeable about spreads than small speculators.
This is so because small speculators many at times find spread trading complex; they are required to analyze two positions instead of one.
However, these challenges have not barred small speculators since they can improve their profit by trading spreads correctly.
Futures spread trading, has helped traders predict the future movements of prices. This will allow them to make decisions whether to hold on or sell based on the prices signals.
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