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December 10, 2014 at 07:19 AM
This time, we bring you news that will affect the NFL and its players’ disability insurance and how the life settlement industry is growing. On page two, you will read more about why Aegon agreed to sell its Canadian life insurance business and how much they expect to lose in that transaction, and you’ll learn about an initiative that helps employees understand how to buy health insurance using the exchanges.
Then, on the third page, there’s everything you need to know about new or redesigned products and how a carrier’s deferred income annuity surpassed the $2B sales mark. You will find key designations from ACLI, LIMRA and Brokers International on page four and awards from all over the industry that even reached Congress and include a big celebration for an agent’s 50th anniversary in the industry.
1. From disability insurance in the NFL to life settlements news and how Aegon sold its Canadian life insurance business
The NFLPA launches disability insurance program
The NFL Players Association announced to its members the launch of a new disability insurance program created and administered by Petersen International Underwriters, the disability income protection specialists out of Valencia, California.
The program will provide members of the National Football League Players Association with career-ending, permanent total disability insurance on a guaranteed issue basis, and make protection available to players on and off the field. According to Scott Petersen, Petersen International’s resident expert of the professional athlete disability market, “This new guaranteed issue athlete DI plan, has allowed Petersen International to turn a longtime friendship with the NFLPA into the chance to provide their members with the strongest and most necessary of insurance benefits when considering the physically hazardous nature of the occupation.”
Speakers at Life Insurance Settlement Association 2014 Fall Conference point to improved market conditions
Life settlements have become an accepted asset class among institutional investors and financial advisors, with a number of favorable market conditions setting the stage for sustained growth of the industry, according to speakers at the 2014 Annual Fall Life Settlement and Compliance Conference in Scottsdale, Ariz. The conference (“The Journey Ahead”) was hosted by the Life Insurance Settlement Association (LISA), which educates consumers and financial advisors about options for unlocking the hidden value in life insurance policies.
“The demographics of the U.S. favor the life settlements industry, as more baby boomers reach retirement age and discover their life insurance policies are valuable assets that can be tapped for cash benefit during their lifetimes,” said Alan Buerger, chairman of LISA.
“What we’re seeing in the marketplace is that the conversation has shifted away from a debate about the pros and cons of life settlements as investments and settlements have now become an accepted asset class by investors and most financial advisors,” said John Dallas, chief executive officer of Berkshire Settlements, one of the conference speakers.
The life settlement market has rebounded from the downturn of 2007-2009 and is currently on an upswing. According to The Deal Pipeline, transactions in the secondary market grew to $2.57 billion in face value of policies sold last year, compared to $2.12 billion in 2012.
The keynote speaker for the conference was Jay Olshansky, Ph.D., professor at University of Illinois at Chicago’s School of Public Health. Dr. Olshansky walked attendees through some of his research into estimating the duration of life, which indicates that although advancements in science and medicine are extending the average life expectancy for Americans, it is unlikely to ever create conditions where Americans are routinely able to live 100 years or more.
“In spite of what you may read on magazine covers and newspaper headlines, the truth is that the timing of death in human beings has never really changed,” said Dr. Olshansky. “It’s certainly true that a larger number of people are living longer today than in the past – and that trend will continue – but life span itself is unlikely to change and we’re just not going to see a whole generation of Americans suddenly living to be 120 years old. We have fewer infant deaths than we did in the past, but in return we now have more people dying from cancer, heart disease and dementia in their 80s.”
Dr. Olshansky’s work is part of a body of research that is allowing academics and actuaries to more precisely model life expectancy among various population groups in the U.S. “There are more than 40 million Americans over the age of 75, and seniors in that age group own between $700-$800 billion worth of life insurance policies,” said Bayston. “Our research suggests that approximately 20 percent of those policies are potential candidates for settlement, which is obviously a huge potential market. The business fundamentals and market conditions are now in place for supporting steady and sustained growth in the life settlements industry.”
Aegon agrees to sell its Canadian life insurance business
Aegon has reached an agreement with Wilton Re to sell its Canadian operations for CAD 600 million (EUR 423 million). The net underlying earnings of Aegon’s Canadian operations were CAD 26 million over the trailing four quarters ending June 2014, while its shareholders’ equity excluding revaluation reserves on an IFRS basis amounted to CAD 1.8 billion at the end of June 2014. As a result, the sale price represents a multiple of 23 times net underlying earnings. The transaction is expected to result in a book loss of approximately CAD 1.2 billion (EUR 0.8 billion).
Aegon will earmark the proceeds of this transaction to further reduce outstanding debt through the redemption of the USD 500 million 4.625% senior bond, due December 2015. This is in addition to the already planned redemption of the EUR 500 million 4.125% senior bond, due December 2014. The combination of the divestment and the non-refinancing of the bond will improve Aegon’s return on equity by 40 basis points, while reducing net underlying earnings by less than 1%. It will also keep Aegon’s leverage ratio unchanged on a pro forma basis, while its fixed charge cover ratio will improve by 0.6 times.
The parties anticipate that the transaction will close in the first quarter of 2015, subject to regulatory approval.
2. Initiatives to help agents, brokers and consumers during PPACA’s open enrollment season
Guardian video series helps employees navigate benefit options
As open enrollment season gets underway, employees begin the process of selecting their workplace benefits for 2015. Many are at risk of over or under insuring due to confusion and a lack of understanding of their coverage options. The Guardian Life Insurance Company of America® (Guardian) is launching an online video series on Guardian Anytime and YouTube that explains how to optimize your workplace benefits coverage to avoid coverage gaps and achieve your financial goals.
According to the 2014 Guardian Workplace Benefits Study SM, employers are shifting more costs and responsibilities to their employees at a time when these benefits are becoming more critical to the workers’ overall financial security and well-being. Forty-seven percent of employers surveyed planned to ask employees to bear a greater portion of the benefit cost, but only 22 percent said they felt “well prepared” to discuss the changing benefits environment. And only one in four employees said their company’s communications are very helpful in choosing what’s right for them. Guardian’s video series helps employers and their employees understand the various benefit options available so they can select the most appropriate coverage for their unique needs.
3. New or revamped products in the industry
Boston Partners awarded $320 million variable annuity mandate from Jackson
Boston Partners announced it has received a $320 million mandate from Jackson National Life Insurance Company (“Jackson”) for the new JNL/Boston Partners Global Long Short Equity Fund (the “Fund”).
Jackson has made the Fund available on its Elite Access variable annuity investment platform. Elite Access offers portfolio diversification through the use of traditional and alternative investment classes in a tax-efficient vehicle. “We are very pleased to partner with Jackson and to be featured on the company’s Elite Access platform,” said Jay Feeney, Co-CEO and Chief Investment Officer, Boston Partners.
The Fund will invest at least 40 percent of assets in undervalued international stocks, with the portfolio’s long positions ranging from 90 to 100 percent, and short positions of 30 to 60 percent. The portfolio will be comprised of over 200 stock positions spread across industries.
New York Life’s deferred income annuity sales surpass $2B
New York Life announced that its deferred income annuity, Guaranteed Future Income (GFI), has exceeded $2 billion in premiums since its July 2011 introduction. Twenty percent of GFI policyholders have contributed more than one premium payment, confirming that GFI helps satisfy pre-retirees’ desire to flexibly invest in their retirements early and over time.
“As pre-retirees plan for retirements that may last 20, 30, or even 40 years, there is growing recognition of the value of a guaranteed, sustainable approach to income. One of the most efficient ways to do that is with a deferred income annuity. This sales milestone is a reflection of the fact that pre-retirees want guarantees and simplicity, and GFI delivers,” said David Cruz, senior managing director in charge of the company’s annuity products. “As sales continue to grow and other insurers enter this market, we expect to see an increasing proportion of pre-retirees — of which there are more than 45 million — seeking pension-like income, guaranteed by highly rated insurers.”
Phoenix launches Safe Harbor Term Life and Safe Harbor Term Life Express
The Phoenix Companies, Inc. (NYSE: PNX) announced it has added term life insurance to its product offerings, Phoenix Safe Harbor Term LifeSM and Phoenix Safe Harbor Term Life ExpressSM. It also announced expansion into call center distribution through LifeQuotes.com for Term Life Express, complementing its traditional distribution through independent marketing organizations (IMOs).
“Adding term life to our middle market insurance portfolio is an important step for Phoenix as we also launch a call center distribution capability,” said Thomas M. Buckingham, executive vice president, Product and Operations. “We expect the term offerings to contribute substantially to growth in our life insurance product line, and the combination of strong IMOs and call center distribution will help us achieve that goal.”
