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February 17, 2012updated 13 Apr 2017 8:45am

Restructuring time at New York Life

New York Life (NYL) has embarked on a restructuring that will see operations of the US largest mutual life insurer divided into an insurance group and an investment group.

By LII editorial

New York Life (NYL) has embarked on a restructuring that will see operations of the US’ largest mutual life insurer divided into an insurance group and an investment group.

Chosen to head the newly created insurance group is executive vice-president Chris Blunt.

Since 2008, Blunt has headed the insurer’s Retirement Income Security (RIS) unit which focuses on annuities. NYL’s operations in Mexico where it ranks as the third-largest life insurer are also being incorporated into the insurance group.

According to NYL, on a consolidated basis, sales of the new insurance group were about $3.3bn in 2011.

Heading the investment group is executive vice-president John Y Kim, NYL’s chief investment officer and head of New York Life Investments. Kim will also assume responsibility for the RIS unit.

On a consolidated basis, sales of the new investments group were more than $50bn in 2011 and assets under management about $300bn.

Commenting on the restructuring, NYL chairman and CEO Ted Mathas said: “This strategic alignment maintains our industry-leading life insurance business as our flagship core business.”

Based on premium income data from insurance organisation LIMRA, NYL had an 11.7% share of the US individual life insurance market in the third quarter of 2011.

Mathas heaped praise on Mark Pfaff, an executive vice-president and head of NYL’s agency system for the strong showing in the life insurance market.

“With his keen sense of purpose and extensive experience in agency management, Mark has led us to the first double-digit market share in new life insurance premium in the company’s long history, an achievement driven almost entirely by our career agents.”

Pfaff has been head of NYL’s agency system since 2006, and from 2008 until the announcement of the insurer’s new structure also headed its life insurance operations. NYL has an agency force of some 12,000 agents, up from 9,300 in 2006.

Indicating that NYL has potentially big expansion plans in the variable annuity (VA) market, Mathas stressed that the new structure “enhances the prospects of New York Life becoming a true leader in retirement solutions beyond income annuities”.

At present, NYL ranks first in the fixed immediate annuity segment where it held a market share of 27.8% in the third quarter of 2011, according to LIMRA.

During the same quarter, LIMRA reported that NYL ranked 15th in the VA segment where it held a market share of 1.5% with sales of $1.82bn.

The attraction of the VA segment is clear, with total sales of $120bn recorded in the first nine months of 2011 – almost double the $61.9bn sales in the fixed annuity segment.

In addition, while VA sales were up 16% compared with the first nine months of 2010, fixed annuity sales were down by 1%.

There is certainly scope for NYL to gain market share in the VA segment, scope that has been enhanced by Canadian insurer Sun Life Financial’s closure to new business in the US VA market at the end of 2011.

Sun Life held a 1.9% share of the US VA market in the first nine months of 2011 with sales of $2.34bn and ranked 13th.

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