Fighting to restore its distribution capabilities, US insurer
The Phoenix Companies (TPC) has opted to go it alone with the
establishment of its own distribution company, Saybrus
Partners.

TPC’s move follows major damage done to its distribution capacity
in March 2009 when two insurers, State Farm and National Life Group
(NLG), announced that they had suspended distribution of TPC’s
products indefinitely.

In 2008 State Farm was responsible for 68 percent of TPC’s annuity
sales and 27 percent of its life insurance sales while NLG
accounted for 14 percent of TPC’s annuity deposits. Abandonment of
TPC was caused by its severe downgrade by a number of rating
agencies.

Clearly in need of a major sales boost, TPC’s annualised life
insurance premium sales were reported at $32.5 million for the
first nine months of 2009, down from $237.9 million for the same
period in 2008.

A key element in Saybrus’ business plan is an agreement with
financial services firm Edward Jones to provide life insurance
consulting services to the firm’s financial advisors.

Under the agreement Saybrus’ wealth management consultants will
work with 11,700 Edward Jones financial advisers, helping them
match insurance products to their clients’ needs. The initial
three-year agreement focuses Saybrus consultants on two new
insurance carriers in the Edward Jones retail distribution network,
John Hancock Life and Pacific Life Insurance Company, both of which
have a selling agreement with Edward Jones.

More bad news

Positive developments on the distribution front were, however,
marred by news that California-based attorney Gerald Kroll has
filed lawsuits against two TPC units, PHL Variable Insurance
Company (PHL) and Phoenix Life Insurance Company (Phoenix). Kroll
alleges that the units targeted elderly individuals to purchase
multi-million dollar life insurance policies with the false
representation that the policies may be freely transferred or
assigned.

Combined, the policies at issue in both cases have a face value
that exceeds $260 million which, according to Kroll, may be the
largest ever life insurance litigation of its type.

Responding to the lawsuits, TPC issued a brief statement on 27
October: “Phoenix does not normally comment on litigation
matters.

However, we believe it is appropriate to respond to a press release
authored by an attorney representing the plaintiffs in litigation
involving life insurance policies issued by two Phoenix
subsidiaries. The allegations noted in that press release are
without merit.”

TPC stressed in the statement that it wanted to clarify that the
$260 million figure noted by Kroll does not represent Phoenix’s
alleged litigation exposure but is, rather, the combined face
amount of the policies mentioned.