Written by ι Stock Market Media Group Staff — May 14, 2013
INSCOR, Inc. (OTC PINK: IOGA) has seen its price per share rise dramatically over the past couple of months, and this appreciation is due in large part to the market beginning to understand the company’s products and how its business model is falling into place for what could be the start of something special. In February, Stock Market Media Group, a research and content development investor relations firm, released its research report, with the company’s share price at $0.04, explaining INSCOR’s solution to what is a colossal problem affecting corporations, over 67,000 municipalities, and many government entities. This is an obvious client list with lots of potential – so much so, that it should make for a very interesting story as contract after contract is signed and the story unfolds completely.
For those new to INSCOR, their product is a specially designed plan that addresses a rapidly growing problem likely affecting someone you know or even you yourself. In a nutshell, corporations, municipalities and many government entities hire employees by winning them over in the recruitment process with promises of employee retiree benefits like pension plans, healthcare, dental, prescription plans, life insurance and other post employment benefits. But, for years they made these promises without actually putting aside the money to pay for them, and accounting rules allowed them to do so.
It’s Time to Pay the Piper
Well, those accounting rules were changed (GASB45) by the Governmental Accounting Standards Board, and it’s time to pay the piper. Needless to say as these entities now have to pay for and account for these future costs, a panic has set in because up until now these were costs that were accounted for on a pay-as-you-go basis. That panic is justified because published reports show that the unpaid liability that befalls so many corporations, municipalities and other government entities is upwards of $1.5-trillion and that may be a conservative estimate.
So, coming full circle and tying this to future success for INSCOR is the monumental head start the company has over competitors in first recognizing the problem, then designing a product that will not only address the money needed to close the gap, but at the same time, generate additional revenue flow for the entities in peril. After the company designed what it calls its FIT OPEB plan which stands for Financed Insurance Trust for Other Post-Employment Benefits, it then started educating its potential client list and marketing its plan as the solution to this growing problem. The plan covers all those benefits employees receive post-employment “Other” than pension plans.
As cash-strapped governments scramble to find OPEB funding solutions, the typical options available are to cut benefits, cut programs and projects, and/or issue bonds or raise taxes. The plan provides governments and corporations with a low-cost, highly-efficient option for the management and funding of their Other Post-Employment Benefits (OPEB) costs.
INSCOR’s Solution Makes the Most Sense
FIT OPEB plans are a customizable retirement benefits solution developed by INSCOR in collaboration with attorneys, actuaries and financial institutions. The plan involves purchasing specifically designed life insurance on active employees using funds borrowed from the financial sector or bond issuance and secured by the insurance policies themselves. The program functions by utilizing the arbitrage between the borrowing rate and the rate of return on the policy.
The plan is modeled to provide an income stream from policy proceeds based on predictable employee mortality and yearly withdrawals from policy cash values. As a result, a FIT OPEB plan can provide a cash stream to support each year’s OPEB obligations, plus fund future OPEB liabilities with reduced spending or taxes than may be required with other funding solutions. INSCOR’s President, Richard Krabbeler, says of the company’s tailored plan and quick to action plan:
“INSCOR’s diverse target market and first-mover advantage as a back-tested, low-cost option to fund OPEB liabilities and other cash flow needs should result in high revenue growth and profitability for the company.
What Potential Do Signed Contracts Deliver INSCOR
Depending on plan design, the anticipated eligible employee life insurance sign-up rate is 5-25% resulting in potential gross contract values of up to $9 million or more for large municipalities, of which up to 30% is booked in Year 1, and the balance amortized equally over the following 4 years.”
It’s clear with so many entities in dire need of a solution for their OPEB funding needs INSCOR has a huge opportunity to generate incredible revenues. The aforementioned equation given by the company’s president demonstrates the potential for a lot of money to be made with such a vast client list sitting there for the taking. INSCOR has a solution that more than addresses the problem, and its well ahead of its competition, so watching the company’s share price slowly climbing makes a whole lot of sense for those who are learning just what this company has to offer.