How is selling off a multiple decade, highly profitable Life Insurance business with dedicated employees and buying worthless cash sink National General "growth"?
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Funny how the Life Business became an issue after COVID death claims spiked
Renewal cash payouts from terminated over-priced UL policies that started to decline was bleeding them dry. Blackstone is in for a rude surprise when the reality of what they bought comes home to roost.
This was a great move. The life co is not hugely profitable, first of all... but the expense load of managing the distribution, the investment portfolio and cash reserves is difficult to manage especially in the current interest rate environment.
They unloaded $26B in reserve liabilities off their balance sheet and got a $2.8B cash payment. Agents will still be required to sell ALR to hit bonus targets and the company will maintain roughly the same profit margins in the products without the investment risk.
“Transformative Growth” is a joke, but credit where due... We are a P&C co who did a poor job at life insurance. Now agents have more options to offer from superior life co’s and we can focus on improving the auto product.
Company is afraid that high profitability will come to an end because of low interest rates.
Not enough slosh to both make money and pay claims.