New York Life and Immediate Annuities

Case : New York Life and Immediate Annuities

Problem statement:`

Mathas and Blunt (The Charman and CEO, and the Executive VP) want to improve the sales of immediate annuities because they saw it as the ideal vehicle to guarantee retirees a lifetime income. But the consumers are completely unaware of the existence or benefits of immediate annuities. Moreover, most advisors ( who represent the go-to-market channel) favored a fee-based business model rather than one in which they would receive only a one time commission.

Situational Analysis

Customers

The  key target customer of NYL is :

➔ A family of four with children

➔$70,000 in income

➔ Current or soon-to-be retired

Sales to this kind of customers are driven largely by life events such as a new job, a new child …

Many retirees just keep doing what they did priori to retirement. Half seek out professional financial advice, the other half just muddle through. They talk to friends, they read the financial section of the paper.

Competition

NYL faces intense competition both a Company competition but also a Product Competition.

For the Company competition, we can identify 2 mains competitors on the sales of Immediate Annuities:

• Genworth Financial ($700 millions of sales)
• Thrivan Financial ($400 millions of sales)

But NYL is above the competition with $1,400 millions of sales. It is important to highlight the small competitor in the filed of Immediate Annuities MetLife: With its new strategy and partnership with Barclays, it could change the Buying Process and shape a new Channel.

It is important to mention also a Product Competition: All the products represent the same benefit for the customer as they are not well aware of all these benefits.

• Deferred Variable annuities
• Deferred Fixed Annuities
• Mutual funds
• Common stocks
• Bonds

This competition is influenced by the Financial Advisors’ Preference for Clients’ Retirement Portfolios but also by the lack of awareness of these products from the clients.

Company

NYL is the Third-largest life insurance company in the US. Thanks to its network of agents (more than 11,500) and collaborators, its offered:

• Life insurance
• Long-term care insurance
• Immediate annuities
• Investment annuities
• Mutual funds
• Retirement planning services
• And institutional asset-management services

NYL is also one of only 3 life insurance companies to earn the highest possible financial strength rating from each of the four major rating agencies even if most other life insurance companies had been downgraded during the 2008 financial crisis.