Holding Their Ground

To win today's turf wars, BE financial services firms must develop new products and find strategic partners

win affluent customers, and exit money-losing businesses. For example, North Carolina Mutual Life Insurance Co. (No. 1 on the BE INSURANCE COMPANIES list) left the student group life accident business. CEO James H. Speed Jr. says assets fell from $175.7 million in 2003 to $161.2 million last year due to the settlement of outstanding reinsurance contracts. The Durham, North Carolina-based firm posted a loss of $650,000 compared with a $10.7 million loss in 2003. Speed says North Carolina Mutual will buy other companies, or blocks of businesses from other life insurers, to add customers and boost profits. “You’ll see a North Carolina Mutual that will be making bold steps to grow and gain market share.” Charles Blackmon, executive director of the National Insurance Association in Durham, contends that some black insurers might be forced to merge during the next five to 10 years, whether they want to or not. “They won’t be able to compete on their own when it comes to marketing, distribution, and having the support structure to serve the customers,” he says.

For Atlanta Life Financial Group (No. 3 on the BE INSURANCE COMPANIES list), 2004 was a year of transition. CEO Ronald D. Brown says assets in the company’s life insurance business fell 23% to $76.4 million and premium income dropped 15% to $49.2 million, mainly because of adverse mortality rates. But a 16% drop in expenses helped boost profits for Atlanta Life to $200,000; the company suffered an $800,000 profit loss in 2003. Brown says Atlanta Life will focus on building its asset management and group reinsurance units and expand on its recent launch into the pre-need business.

Last year
was a time of reassessment for Golden State Mutual. Teasley, the insurer’s CEO, says profits grew to $500,000 as investment income rose in value, up from a profit loss of $457,000 in 2003. This year, the carrier is launching an aggressive marketing effort to boost the number of policyholders from 80,000 to 90,000 by year’s end and to 200,000 or more by 2010. “We’re raising in the range of $6 million in additional capital this year to do some things we have not done in the past,” says Teasley.

DIVERSIFYING TO GROW
For some institutions, whether a private equity firm or investment bank, the capital markets continue to pose tough challenges as well as opportunities. At Fairview Capital Partners Inc. (No. 1 on the BE PRIVATE EQUITY FIRMS list), the Farmington, Connecticut, firm’s capital under management rose to $1.6 billion in nine funds last year, from $900 million in seven funds in 2003. JoAnn Price, the firm’s president and a managing partner, says two major clients led the growth. The first client, Constitution Liquidating Fund, which has the State of Connecticut Pension Fund as its primary investor, added about $640 million last year. The second client, New York/Fairview Emerging Managers L.P, mainly consists of pension funds for the city of New York and brought in about $60 million. Regarding future growth, Price says, “We’re looking to expand into the

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