New MarketOpportunities

NAILBA 32 - Where the Brokerage Industry Meets

November 22, 2013

Dallas, Texas

Participants• Panel Facilitator:

Grant S. Andrew

VP, New Market Development

Legal & General America

• Panelists:• John Ziambras, CEO – AIMCOR Group

• Dick Schuettner, President – Insurance Designers of America

• Carol Rando, Executive Director – PLAN

NAILBA32- G.Andrew

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Key Points

•State of the Life Insurance Industry

•Common Denominators with each Distribution

•What Consumers Expect

•A Glide Path Forward

•Why We Need to Embrace the Future

•A Possible Future Outlook

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U.S. INDIVIDUAL LIFE PREMIUM

13.414.3 13.5

11.6 12.1 12.4 13.1 13.6 13.9 14.5 15.1

$0

$2

$4

$6

$8

$10

$12

$14

$16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

(An

nu

ali

zed

Pre

miu

m)

Bil

lio

ns

As Reported Forecast

Source: LIMRA 4th Quarter 2012 preliminary results ($12 Billion in Life Sales is based on

LIMRA projecting 30% of the sales)

Sales generally flat: Growth is a share game so far!!!!.

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TOTAL LIFE SALES:$12 billion per year

• D2C Agencies $600 Million

• BDs $1.5-2 Billion(Stockbroker, Banks/ savings, etc.)

• Core Brokerage Agencies

$4-5 Billion

• Career $5-6 Billion (PPGA, Worksite, Home Services, etc.)

• P&C?

• Other?

Agency

Building

34%

$4,080,000,000

Banks/ Savings

Institutions

1%

$120,000,000

Brokerage

38%

$4,560,000,000

Direct

Response

5%

$600,000,000

Home Service

1%

$120,000,000

MLEA

8%

$1,080,000,00

0

Other

0%

PPGA

8%

$960,000,000

Stockbroker

2%

240,000,000

Worksite

Marketing

2%

240,000,000

$12 Billion in Life Sales is based on LIMRA projecting 30% of the sales

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Advisor/Producer Type by Channel vs.

Total Sales Force

2004

161955

25%

2004

165024

25%

2004

102689

15%

2004

98416

15%

2004

129071

20% 2007

163409

25%

2007

162271

25%2007

99461

16%

2007

92963

15%

2007

123441

19%

2010

149187

24%

2010

163814

26%

2010

97792

16%

2010

89121

14%

2010

120692

20%

Independent B/D-

15%

5% Decline

Affiliated-25%

(Non-registered, includes

P&C)

7% Decline

Independent Agents-25%

(Non-registered)

8% Decline

Career-15% (Registered reps /

Affiliated)9% Decline

Bank & Wire-house-

20%

6% Decline

Total

Salesforce2004: 657,155

2007: 641,545

2010: 620,606

6% Decline

LIMRA Census of US SalesNAILBA32- G.Andrew

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# Policies by Underwriting Class

Average

801,733

Average

464,795

Average

102,108

Standard Average1,146,195

Average

250,412Average

145,459

Average

366,180

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Preferred Best NS Preferred Other NS Preferred Other SM Standard NS Standard SM Substandard Other

2006 2007 2008 2009 2010 Average

Cumulative Preferred total average: 1.3M-40%

Cumulative Non-Preferred total average: 1.9M-60%

Standard ClassesPreferred Classes

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# Policies by Year & Underwriting Type or Process

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2006 2007 2008 2009 2010 2011

Guaranteed Issue - 7%

Simplified Issue - 14%

Non Medical – 23%(no vitals or fluids)

Other - 11%Full Medical – MD exam required – 5%

Paramed – 41%

Paramed Obtained Applications

Total Average: 1,150,384

41% of all policies placed1,666,754

926,041

651,133

549,384

380,838

170,456

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Common Denominators with Distribution

Business Channel

Client Segment and Origination

FocusedLife Products

Reps Education and Sales Training Requirements

Reps Preferred Submission & Fulfillment Method

Reps Preferred Support

Career agents, Out-brokerage & Independentreps

•Super Affluentto Emerging Markets (All)• New and Existing clients

Term, WL, UL and SUL

•CE training•More complex sales ideas

•Full paper apps with full medicals•eApp•Paper delivery

•Concierge/case mgmt and marketing•Illustrative concepts

Wire Houses, Banks &CPA

•Super Affluent to Affluent•Existing clients

Term, UL, WL, VUL, and SUL

•CE training•One pager client profiles/ sales ideas

•Term drop ticket •Informals/ full app for permanent•eDelivery/ epay

•Point of Sale•Sales Desk•Lapse notices•Cash values

IndependentBroker/Dealer

•Affluent•New and Existing clients

Term, UL, and VUL

•CE training•One pager client profiles/ sales ideas

•Term drop ticket •Full paper/ eApp for permanent•edelivery/ epay

•Sales Desk•Lapse notices•Cash values

Direct Marketers

•Middle Markets•New Clients

Term •Product and underwritingniches•How to sell training

•STP with DM proprietary systems•edelivery/ epay

•Case Mgmt & Underwriting•Lapse notices

P&C, Healthcare,etc.

•Emerging Markets to Middle Markets•New and Existing Clients

Term •Basic sales education • Basic one pager client profile/ sales ideas

•Drop ticket•edelivery/ epay

•Sales Desk•Lapse notices

DifferentiatorsCommonalitiesMarket Segments

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Consumer Centric Models

P&Cesurance.com

Progressive.com Online multicarrier

quotes, mobile claims

assessment, snap shot, etc.

Financial Services

eTrade.com, Schwab.com, etc.Online analytics,

total portfolio review, goal

alignment, trade execution,

trending, etc.

Banking WellsFargo.com, Chase.com, etc.

Online Statements, check scanning deposits,

Bill payment online,

Mortgages online (online everything)

MarketingFidelity.com-Path

to RetirementING.com- What’s

My NumbereHarmony.com

Making matches

Automotive/ Product

ComparesAutotrader.com/

KBB.comPrice, Functional,Safety rating, etc.

Store locations compares

What and How Consumers Want1. Understandable

Language, Comparisons, Highlight differences

2. More User Friendly Processes

3. Talk to me and not at me

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Opportunities

Generational % Own Individual Life Ins

Policies33% of Gen X– 82.1M18% of Gen Y – 76M

43% of Baby Boomers-79M (10,000 retiring

every day)(LIMRA ’10)

US Demographics4.8%-Asian-14.6M

16.4%-Hispanic- 50M12.6%-African

Americans-38.9M72.4%-White

308M Americans82% live in cities(wikipedia-2010)

% Own Individual Life Ins Policies

35% both male and female

53%-Hispanic47%-Chinese

64%-Asian Indians54%-African America

(LIMRA)

Social Media 1.1 billion Facebook, 500 million Twitter,

259 million LinkedIn acct/ members

1 billion YouTube unique user visits

(wikipedia-’12 and ‘13)

Women51% of Pop

85% of consumer purchases/

”She-conomy”60% of wealth in US (thenextweb.com-

‘2012)

Implications1. Women matter2. Plenty of life sales

Opportunities 3. Minorities value

protection4. Need to communicate

in new ways

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Business Sales Mixes

20%10%0%70% 0%

P&CDMs

•Drop ticket (Term & UL)•eDelivery/ epay

•Term20%0%0%40% 40%

IBDsBank,

Wire, CPACareer &

IndependentEmerging to Middle Markets Affluent to Super AffluentAll Client Segments

IMO/ BGA Office- A

IMO/ BGAOffice- B

IMO/ BGA Office- C •Term

10%15%20%45% 10%

•Term20%20%20%20% 20%

IDEAL IMO Leverage/Diversification

% of R

evenue by Channel

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Opportunities for BGA Offices

P&C

DMs

IBDs

Career &Independent

•Basic sales education/ tools • Basic One pager client profile/ sales ideas

•Drop ticket (Term & UL)•eDelivery/ epay

•Sales Desk•Lapse notices

•Product and underwriting niches•How to sell training

•STP with carriers•Proprietary systems•eDelivery/ epay(carriers)

•Case Mgmt & Underwriting•Lapse notices

•CE training•One pager client profiles/ sales ideas

•Term drop ticket •Full paper/ eAppfor permanent•eDelivery/ epay

•Sales Desk•Lapse notices•Cash values

•CE training•One pager client profiles/ sales ideas

•Term drop ticket •Informal/ full app for permanent•eDelivery/ epay

•Point of Sale•Sales Desk•Lapse notices•Cash values

•CE training•More complex Sales Concepts

•Full paper apps with full medicals•eApp•Paper delivery

•Concierge/ case mgmt and marketing•Illustrative concepts

Affluent to Super Affluent

Emerging to Middle Markets

Bank, Wire, CPA

Sales Training Platform

BGASupport

(All Client Segments)

Products

•UL & SUL•WL•VUL

•Term & UL•VUL

•Term

•Term

•UL & SUL•WL•VUL

More B

GA

Support R

equired

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What Could Happen!!!!Industry Game Changers

CompanyName

Industry Game Changer

Amazon Online ConsumerRetailer

Online vs. Brickand Mortar

Walmart Retailer Supply ChainManagement

Dell Consumer Electronics

Direct, custommade, just in time Manufacturing

Apple Consumer Electronics

ConsumerFocused

Political US Factors

• 100% of the consumers have access to electricity, phones, and water

• 91.8% of the households have checking accounts (banking)

• 67.4% of occupied housing is by the owner (mortgages)

• 59% of employees participate in a defined benefit plan (savings)

What happens next???? Could life insurance lose tax-favored status,

fall victim to deregulation, suffer lower estate protection benefits…???

Are we protecting the American Dream??

44% of the households have an individual life insurance policy-50 year low

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Future View

Consumer Smart Forms vs. Consumer Guided Tour

Online “Turbo Tax” for Life insurance Process

Avatar tour

guide

Any Consumer Website

Emerging and Middle

Markets, Gen X& Y

Self Service vs. Tele-interview

and 1800 Sales desk

Simple online education/

tools with chat rooms, phone

support

Total Investment Portfolio

Analytics etc.

eTrade, Charles Schwab

etc.

Affluent Advisor Market

Blood vs. Money

Small Blood Sample (pin

prick)

Kiosk Blood Samples,

Guaranteed Issue

Walmart, Target, etc.

Middle Markets, Older clients

Predictive Analytics

Underwriting vs. Highly Efficient

Underwriting

Simplified Issue@Fullu/w prices

and or Summary for

Review/ Decisions

Lifetime Contestability/

simplified issue

Backend support for all

markets

Emerging Markets to

Super Affluent

Immediate vs. FutureImmediate Future Future

Consumer Distribution

Segment/ Channel

Risk Taking Vs. Managing Risk

Longer Term

Short TermQuote, Illustration Form Firms

Financial Services

Paramed

Deloitte, Lab Companies

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Questions?????Questions?????Questions?????Questions?????

Thank You!!!!!!

End Notes/ Source

• Slide 4- LIMRA 2012• Slide 5-Source: LIMRA's Retail Individual

Life Insurance Sales in the U.S., Second Quarter 2013

• Slide 6-LIMRA’s Census of US Sales Personnel and Cerulli Associates,8/30/2011

• Slide 7-Source: LIMRA’s U.S. Individual Life Insurance Sales Survey and LIMRA estimates

• Slide 8-U.S. Individual Life Insurance Sales Survey Supplement Underwriting Class by Product - Aggregate Participant Results U.S.

• Slide 9- Individual Life Insurance Annual Sales Supplement - Underwriting Type Results-2006-2010

• Slide 11-Autotrader.com, kbb.com, progressive.com, etrade.com, schwab.com, wellsfargo.com, chase.com, fidelity.com, ing.com, eharmony.com

• Slide 12• Women top 30 stats you need to know

when marketing to women and by 2022, US Women will control 2/3 of the wealth thejanedough.com

• Generational X, Y, Z wikipedia and LIMRA Life Insurance Ownership Across the Generations August 2011

• US Demographics-wikipedia 2010• % Own Ind Life Ins Policies- LIMRA US

Ownership study 2010, Chinese and Asian Indians over 10 years ago, African Americans 2009, Hispanic market 2013

• Wikipedia- Facebook, Twitter, Linkedin, andYoutube Nov 2013

• Slide 14 • CnnMoney-bank accounts- Sept 12,

2012, USA Today- LIMRA Dec 2010, Charts: How the Increase of 401(k)s Has Create Lots of Inequity- Sept 3, 2013, Wikipedia-Homeownership in the US 2009

• Slide 15- Good to Great- Jim Collins and www.businesspundit.com “The 25 Worst Business Failures in History

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