120% Comp on Whole Life?? Is This Possible?

[Larry Tew]

...But one of the best ways to judge financial stability (at least imo) is the asset to liability ratio. Basically, how much do you have to cover your obligations.

Out of the top 25 largest Life Insurers, the average amount of assets per $100 of liabilities is around $105.
This means they have $5 above and beyond every $100 of promises.


AE, while BBB rated, has $107 per $100 of liabilities; $2 more than the average of the top 25 largest.

Thats a higher Asset to liability ratio than Pru, Trans, JN, JH, LFG, Met, Nationwide, Principle, Pac.

And they are only $1 less than NWM & Mass who are at $108 per $100 in liabilities.
(NYL & Guardian blow everyone out of the water with $113 & $115)

This is what Standard Analytics (not to be confused with S&P) calls the "solvency ratio". It's one of a hundred factors the rating agencies look at.

 

[donamese]

According to Standard Analytics, solvency (assests for each $100 of liabilities) as of Dec 31, 2010.

Allstate - $106.02
Hartford - $104.08
John Hancock - $102.48
Lincoln National - $104.25
New York Life - $113.72
Prudential - $103.72
State Farm - $113.85
Pacific Life - $106.31


Avg of 25 of Leading Life Co's - $105.74
Oxford Life Insurance Company - $128.47



More from the brochure:

Surplus Funds -
Avg of 25 Leading Life Companies - $13.05
Oxford Life Insurance - $31.02

Liquid Invested Assets -
Avg of 25 Leading Life Companies - $46.09
Oxford Life Insurance - $110.92

Surplus to Life Insurance in force -
Avg of 25 Leading Life Companies - $8.65
Oxford Life Insurance - $83.72



I am pretty sure that would shut the door on a producer trying to replace a policy based on the companies rating alone.

 

[Larry Tew]

As I said... to each his own. But try this experiment. See if you can find a company who publishes and makes a big deal about their "solvency ratio" who ISN'T either:

1. Rated A- or lower by Best's... or

2. Only has a Best's rating without any of the "tougher" ratings (Moody's, S&P)

If you're looking for permission or an excuse to use a B-rated company, any excuse will do... including "solvency ratio". What is it about solvency ratio that Oxford agents know about that Best's, Fitch, S&P, or Moody's don't know?

Let's be honest here. A 120% commission can make the ugliest company look good. It's like "beer goggles" only here it's "commission goggles".