Sunday, October 17, 2010

(No.119) Great-West & London Life [+Manulife] receives a variety of interesting responses to the views I express in my columns. I periodically select excerpts from a number of them for presentation here (see below).

As in previous presentations of responses from readers, for reasons of privacy I have withheld email writers' identities unless they write to RickardsRead in an official capacity. However in order to provide context for their views I have preceded each excerpt with a brief reference to the writer's role or connection to the subject.

Words in italics are mine.


Ref. -- COLUMN NO.118: "Great-West '0',par policyholders '1' [about the Ontario court decision in the favour of a par policyholder class action against Great-West Lifeco -- $455.7 million -- over its use of par funds in its takeover of London Life.]

1. from a securities lawyer:

A splendid account with historical depth that makes me wish I had at my command a tenth of what you have forgotten. It led me to try to track down a CLU text I used to rely on, Pedoe and Rudd ("D.S." [Rudd], someone else it appears) Life Insurance and Annuities in Canada, ca. 1993 ....

[Note: D.S. Rudd is in fact the 'Bill' Rudd to whom I referred in Column No.118. His first name is D'Alton. He revised and updated the original text by Arthur Pedoe. It is an excellent work of reference.]

2. from a Canadian life insurance executive:

Cheering ... cheering ...cheering... Way to go Bill Rudd and thank you Al for letting us know about it. I had NO idea and of course didn't read about it anywhere.

3. from a former London Life regional manager:

I knew Bill Rudd when he was chief actuary at London Life and to say that he was brilliant is not an overstatement. ... I enjoyed your piece on Bill.

4. from an executive at a major Canadian life insurance company competitor of London Life:

Great article! Here's to Bill Rudd.

5. from an American insurance professor:

Thanks for a great article! I never met Bill Rudd but I wish I had. He is my kind of guy.

Ref. COLUMN NO. 116: "Trying to bury a turd on a frozen pond" [about trying to sell individual life insurance 'directly' without using selling 'traditional' agents]:

6. from a Canadian internationally experienced life insurance executive:

Great article as always. But an important point is missed and it should be more of a positive. Just think of all the expert witness retired [life insurance] underwriters can work on as they prove there was nondisclosure [on direct life insurance sales].

Since the real underwriting will be done at claim time there should be lots of work for all --- just like creditor [group] insurance where more and more it appears risk selection is done after death or disability.

7. from an American life insurance person of long experience:

Years ago (probably 1979) I was in a meeting with Larry Jenkins, then president of Monumental Life and some guys from outside North America. My international friends had heard Larry say in a presentation that Monumental used ordinary, home service, and direct response distribution methods. They asked how the company could use direct response and still keep the sales force happy.

Larry's response was: "We pay them (the agents) a commission if they can prove that they lost a sale to one of our direct response products. If they go into a situation where a prospect tells them that the prospect bought a direct response product in the last year we give the agent the commission he would have earned on the product if he had sold it."

Larry then said: "Guess how many commissions we paid last year! (Pregnant pause) Less than five .... Our agents don't contact the kind of prospects who buy our direct response product."

If companies want to compete with their agents by offering direct response products, they would do well to consider Larry's option. The [direct sales] marketing strategy probably creates a lot more angst than actual damage to the agents, but why annoy those who have made you successful?

Ref. Column No. 113: "Manulife & Sun Life: a safety parallel?"

8. from a policyholder of John Hancock Life Insurance Co. of Boston, a company taken over by Manulife in 2004:

I just read an article on Manulife that you wrote last month comparing their recent financial difficulties to that of Sun Life back in the Depression. As a John Hancock policyholder, how concerned should I be about the parent company's problems? My policies are well in excess of state guaranty limits. Thank you in advance for any advice/comments that you would be willing to make.

[ I exchanged emails twice with this policyholder explaining why I considered Manulife's recent profit performance and related financial matters NOT to be a threat to the safety of the policyholder's contracts with Manulife's subsidiary.]

9. from an executive of a large Canadian life insurance company:

Great article! It's interesting how history shapes us.

10. from a Canadian career agent:

Thanks for the history lesson. Makes you wonder what people learn ... apparently not much.
It would be interesting if you could contrast this with the financial shape of the mutual companies both through that time and now through these current times.


Alastair Rickard