Bumbera naf presentation 7 1-09
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Bumbera naf presentation 7 1-09

on

  • 383 views

 

Statistics

Views

Total Views
383
Views on SlideShare
383
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.
  • Since the emergence of the subprime market collapse more than a year ago, the financial markets have been extraordinarily turbulent. The government takeover of the giant mortgage lenders Fannie Mae and Freddie Mac, the acquisitions of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, the federal government’s loan to AIG, the conversion of the last two independent investment banks into bank holding companies, and the $700-billion rescue of the financial sector all have combined to fundamentally reshape the financial services industry to a degree not seen since FDR’s New Deal.

Bumbera naf presentation 7 1-09 Presentation Transcript

  • 1. Key Trends in the Life Insurance Industry STEVEN M BUMBERA, CLTC Financial Services Professional Agent, New York Life Insurance Co Sea Girt, NJ (888) 695-5565 [email_address] www.bumbera.net
  • 2. Today’s Agenda
    • About me and my involvement with NAF
    • Insurance 101
    • Longer-term trends in the life insurance industry
    • The financial crisis and its impact on life insurers
    • What it takes to succeed in the insurance industry
    • Q&A
  • 3. Why I’m a Life Insurance Agent & Why I’m Involved With NAF
    • Why I became an agent
    • Value to me and my family
    • My Involvement with NAF
      • Benefits for me
      • Benefits for the students I’ve worked with
  • 4. Insurance 101
  • 5. What Insurers Do
    • Transfer risk from the consumer to the insurer for a fee
      • Risk “pooling”: bringing several risks together to balance the consequences of any individual risk’s being realized
    • Underwrite policies, charging policyholders fees based on their risk levels
      • Smokers pay higher life insurance premiums
      • Young men pay higher auto insurance rates
    • Build reserves with the premiums they collect from policyholders
      • Legally mandated minimums to ensure carriers can pay claims
    • Increase their financial assets by investing their reserves
  • 6. Key Industry Segments
    • Life
    • Long-Term Care
    • Property / Casualty
      • Auto
      • Home
      • Specialty (specific industry, kidnap/ransom)
    • Health
      • Medical
      • Dental
    • Disability
    • Liability / Malpractice
    • Reinsurance
  • 7. Life Insurance and Annuities: Meeting Two Major Consumer Needs
    • Protection
      • Protect families and businesses from the financial hardship created by the death of a key individual
      • Provide the policyholder with peace of mind
    • Asset Accumulation
      • In addition to death benefit, a powerful savings vehicle
      • “ Fixed” policies offer guaranteed returns
      • “ Variable” policies participate in upside (and downside) of the financial markets
  • 8. Life Insurance and Annuities: Major Products
    • Life Insurance
      • Term insurance: coverage for a fixed period of time
      • Permanent insurance: lifetime coverage plus asset accumulation
        • Whole Life
        • Universal Life
        • Fixed or variable
    • Annuities
      • Investment (Deferred) annuities: death benefit plus asset accumulation
        • Fixed or variable
      • Income annuities: guaranteed income stream
  • 9. Life Insurance Companies: Playing a Key Role in the U.S. Economy
    • Life insurers are the economy’s #1 source of long-term capital
      • Largest source of bond financing for corporate America, with more than $2 trillion invested annually
      • Insurers’ bond purchases financed the Boulder Dam, the Sears Tower and the Empire State Building, among other landmark projects
      • Insurers are a crucial source of long-term mortgages, and a very high percentage of their mortgage holdings remain in good standing
    • The industry employs about a million people and contributes roughly $10 billion annually to federal, state and local tax revenues
    • Every year, life insurers return hundreds of billions of dollars to the communities they serve in life and annuity benefits and dividends
  • 10. Longer-Term Industry Trends                                              
  • 11. Life Insurance Industry Trends
    • Demutualization and move to independent agent distribution
      • Companies seeking access to capital markets, in part to fund acquisitions
      • Windfall for top management
      • Challenge of balancing short-term demands of Wall Street with long-term nature of products
      • Spurred move away from career agent distribution, which requires long-term investment
    • Convergence of life insurance and other financial services
      • Emergence of financial service “supermarkets”
      • Growing awareness of life insurance as an asset class
    • Aging of the agent force: average age is now 50+
      • Only a handful of career agency companies still aggressively recruiting
    00381341 CV (Exp.03/09)
  • 12. Life Insurance Industry Trends
    • Growing dependence on technology
      • Product illustrations
      • Communications
      • Practice management
    • Increasingly complex product offerings and regulatory environment
      • Demand for increased customization (riders, “dial-a-guarantee”)
      • Regulated independently by each state
      • Focus on protecting consumers, especially seniors
    • Marked shift away from permanent insurance to term, especially long-duration term (20-30 years)
    00381341 CV (Exp.03/09)
  • 13. Life Insurance Industry Trends
    • Growing secondary market for life insurance
      • Viatical market emerged in the 1970s in response to the AIDS crisis
      • Growing popularity of life settlements
      • Insurance purchased with the intent of selling: investor- and stranger-owned life insurance
    • Internet playing an increasing role
      • 40%+ of consumers now use the internet to educate themselves about insurance and to choose a carrier or an agent
      • Direct online purchases still comprise a very small share of the market because of the complexity of product offerings
    00381341 CV (Exp.03/09)
  • 14. Life Insurance Industry Trends
    • Huge focus on saving for retirement and income in retirement
      • 78 million baby boomers entering or in retirement
      • Trillions of dollars in assets will be transferred from one generation to the next
      • With improvements in longevity and health care, retirement now lasts longer (20-30 years in many cases) and is more active – and expensive
    • Personal responsibility for retirement continues to grow
      • Fewer than 20% of workers are now covered by pension plans
      • Long-term prognosis for Social Security is uncertain
      • Limits on 401(k)s and IRAs
      • Personal savings are key
    00381341 CV (Exp.03/09)
  • 15. The Financial Crisis’s Impact
  • 16. Most Fundamental Reshaping of the Financial Services Industry Since the New Deal
    • Subprime mortgage market meltdown
    • Government takeover Fannie Mae and Freddie Mac
    • Bankruptcy of Lehman Brothers
    • Acquisitions of Bear Stearns, Merrill Lynch, Washington Mutual and Wachovia
    • Federal government’s huge loans to AIG
    • Goldman Sachs and Morgan Stanley become bank holding companies
    • Treasury Department’s $700-billion rescue of the financial sector
    00381341 CV (Exp.03/09)
  • 17. How Will Life Insurance Companies Fare in This Recession?
    • Industry is typically nearly “recession proof” …
      • Life insurance is usually “sold, not bought”
      • Sales declined by about 2%, on average, during past several recessions
    • … but it’s different this time
      • Some companies have taken on far more risk than in the past
        • Investments in credit default swaps, collateralized mortgage obligations and other derivatives
        • Products with aggressive guarantees
      • Very well-publicized problems at AIG and other insurers have shaken consumer confidence
    00381341 CV (Exp.03/09)
  • 18. Consumer Confidence in All Financial Institutions Has Declined 00381341 CV (Exp.03/09) Pct. of consumers with an “extreme amount” or July Oct Jan Apr “quite a bit” of confidence in… 2008 2008 2009 2009 Community Banks and Credit Unions 59% 32% 45% 43% National and Regional Banks 46 12 22 21 Insurance Companies 32 12 18 15 Mutual Fund Companies 31 9 12 12 Federal Government & Regulators 18 8 9 8 Stock Brokerage & Investment Firms 19 4 7 6 Financial Rating Agencies 17 4 6 4 Source: LIMRA (2009)
  • 19. Consumers’ Response to the Financial Crisis
    • Sharp rise in the personal savings rate to a 14-year high
    • 94% of consumers say the recession will have a lasting impact on the way they handle their finances*
    00381341 CV (Exp.03/09) Savings as a Percentage of Disposable Income * Source: Money Magazine
  • 20. Life Insurance Sales Off Sharply, As Annuity Sales Climb
    • Because of sharp declines in the the fourth quarter, 2008 was worst sales year for life insurance in the past 50 years
    • Life sales declined another 26% in the first quarter of 2009
      • Term sales holding up well, as consumers seek affordable protection
      • Resurgence of interest in whole life
        • A safe place to put money
        • Issued by mutual life insurers, which have been far less affected by the crisis than publicly traded insurers
      • Variable life insurance sales off sharply, reflecting lack of confidence in the equity market
    • Fixed annuity sales have surged 50% year to date to a record high, with a clear “flight to quality”
    00381341 CV (Exp.03/09)
  • 21. What It Takes to Succeed
  • 22. Life Insurance Careers
    • One of the most stable large industries in the U.S., without major fluctuations in employment
    • Major job categories
      • Sales
        • Agents
        • Sales management
      • Product
        • Product development
        • Product management
        • Actuaries
        • Marketers
      • Underwriting
      • Compliance
      • Investment management
      • Corporate infrastructure
        • General management
        • Customer service
        • Technology
        • Finance
        • Human resources
  • 23. Preparing for a Life Insurance Career
    • First and foremost, a “people” business
      • Working directly with or designing solutions for consumers
      • Active listening
      • Strong interpersonal skills
      • Self-motivation and discipline
      • Language skills increasingly important
    • Creative and lucrative opportunities for mathematicians
    • Alternate career path for doctors and other medical professionals
    • Limited opportunities for those without college degrees
  • 24. Questions? Q A & STEVEN M BUMBERA, CLTC Financial Services Professional Agent, New York Life Insurance Co Sea Girt, NJ (888) 695-5565 [email_address] www.bumbera.net