Warren Hersch

A top-selling offering from Pacific Life is emblematic of a wave of indexed universal life products that employ increasingly complex, but opaque formulas, a product expert says in a review obtained by Life Annuity Specialist. The company’s marketing documents include illustrations with aggressive returns that risk disappointing policyholders and underscore the urgent need for revised rules governing the illustrations, according to Bobby Samuelson, an executive editor of The Life Product Review.

With the dust not yet settled following the recent spike in M&A deals spearheaded by The Hartford, Voya Financial and Lincoln Financial, industry prognosticators are focusing on the potential long-term outlook. One distinct possibility: a bifurcation of the industry between carriers serving separate markets for individual and group protection products.

A top executive with a track record overhauling troubled insurance blocks will be taking ownership of the group benefits business Lincoln Financial acquired from Liberty Mutual in a blockbuster $3.3 billion deal that has catapulted Lincoln to the top-tier of group insurers. Richard (Dick) Mucci, president of the group protection business at the Radnor, Pa.-based carrier, will be overseeing efforts to strengthen Lincoln's now dominant presence in the group insurance market.

The news that multinational conglomerate General Electric will be injecting an eye-popping $15 billion into its beleaguered long-term care reinsurance run-off business and is weighing a break-up of the company is reverberating industry-wide. The announcement is raising questions about other potentially troubled LTCI run-off businesses, the financial health of life-annuity carriers that have substantial closed LTCI blocks, and the ability to sell these blocks to potential buyers.

A secular trend is underway that could shake up the life-annuity industry for years to come: the divestiture of low-margin, capital-intensive retail products by carriers keen to redirect their focus for more profitable businesses, including the burgeoning employee benefits space. Voya Financial, following in the footsteps of MetLife and The Hartford, has now turbo-charged the trend with its blockbuster sale of variable, fixed and fixed indexed annuities in a multi-party, private-equity-backed deal.

MetLife’s disclosure that it has failed to pay retirement benefits to an estimated 30,000 group annuitants has prompted serious questions respecting potential fallout from the news. And the concerns being raised aren’t just about regulatory scrutiny of the oversight. At issue is a potential industry-wide problem among life-annuity carriers — Athene, MassMutual, OneAmerica, Principal, Prudential, among others — that buy out defined benefit pension plans. In their rush to cash in on an expanding market, many may not have exercised adequate due diligence in verifying current information on participants in DB plans they acquired and funded through the sale of a group annuity to the offloading plan sponsor.

Amid hand-wringing over the continuing woes of stand-along long-term care insurance sales, the industry is cheering one sector of the market, linked-benefit life/LTCI products. The optimism is warranted: Major carriers active in the space — Lincoln Financial, Nationwide, OneAmerica, and others — are enjoying double-digit gains in sales.

With 2018 just a month off, major mutual life insurers, including New York Life, Northwestern Mutual and MassMutual, have disclosed planned dividend payments to policyholders. The eight- to ten-figure distributions — in New York Life’s case a record total — raises a perennial question: Do the mutual companies derive a competitive advantage from the payouts?

With the Department of Labor’s fiduciary rule set to fully take effect July 1, 2019, life-annuity carriers are scrambling to develop products that align with streamlined requirements for level-fee advisors. To that end, many among them — Jackson National, Lincoln Financial, Transamerica and others — have incorporated exchange-traded-funds into the subaccounts of fee-based variable annuities.

It’s all about location, location, location. This popular mantra of the real estate world has taken on special significance in the insurance space, notably in respect to technology. With increasing urgency, life-annuity carriers — Aflac, MassMutual, MetLife, Nationwide, USAA, and others — are moving internal technology talent and operations to centers of innovation across the U.S. Their aim: to tap into insurtech and fintech developments on the cutting edge, as well as human capital the carriers view as key to transforming their businesses.

Among the industry’s 870-plus life-annuity companies, The Savings Bank Mutual Life Insurance Company of Massachusetts (SBLI) held until last month a unique position: part mutual insurer responsible to policyholders; part stock-owned company answerable to banks. An odd hybrid SBLI is no more. In July, the Woburn, Mass.-based carrier parted company with the banks by converting to a mutual-only insurance company and adding "Mutual" to the company name. These changes — 30-plus years in the making — have freed the insurer to press ahead with a long-term growth strategy of expanding beyond its Massachusetts base.

It’s not every annuity provider that sees its legal structure as a competitive differentiator. But for Robert TeKolste, president of the Independent Annuity Group at Sammons Financial Group, the company's non-public status ranks high among several factors that have underpinned the annuity group’s extraordinary performance in recent years — outside financial results that show few signs of abating and that are causing the industry to take notice.