Ohio National and Constellation

[walthamny]

My educated guess is they were advised to get the VA riders off their balance sheet before they could sell ONL on the market. Or they tried selling it and it was one of the issues, buyers said no in due diligence. That may explain why they tried to get rid off the VA trails in a hurry and in an unusual quick and sloppy way. The way they did things it was obvious they did not value the future of relationships with independent agents. They could have approached us, give us a year before making compensation change and offer some type of compromise if the agents selling these VA"s continued to sell other ONL products. First they F@#$ and then to correct the matter their explanation was F@#$$. SO now this.

 

[bmarsh]

why am i still seeing Ohio's google ad at the top of the forum page? are they still a sponsor?

 

[scagnt83]

They spell it out here & say it is common with how their accounting works & how it also happened in other good economic years in the past decade.

Sounds like they spent a lot of money to buy out clients out of the GMIB VA contracts (never understood how this passes the FINRA -SEC best interest rules, etc by charging fees for years for a rider & then deciding you cant afford to offer it so lets bribe the client out of the too lucrative of a contract feature)

https://www.ohionational.com/portal...woid=5224bdab08011710VgnVCM1000000414650aRCRD

That pretax income history does not give the warm and fuzzies. There are huge swings there. Not just talking about 2019. They have had 3 negative years since 2011. Maybe those were accounting issues as well. But even the positive income has HUGE swings in it.

This situation certainly shows that we need to dig into carrier financials more than most of us do. Im including myself in that too. I never considered ON to be financially unstable to that extent. Small carriers will see more fluctuations naturally. But those are some large swings ON has seen. At least it seems so to me.

 

[scagnt83]

My educated guess is they were advised to get the VA riders off their balance sheet before they could sell ONL on the market. Or they tried selling it and it was one of the issues, buyers said no in due diligence. That may explain why they tried to get rid off the VA trails in a hurry and in an unusual quick and sloppy way.

That is a very good observation. Most likely spot on.

There is a reason so many of their VAs were sold... they had good benefits. They were underpriced, and became a heavy load on the carriers balance sheets.

In retrospect, that was the red flag about their stability and future intentions.

To me, it was just another reason not to do business with them. Hadn't in a very long time.

 

[scagnt83]

That may explain why they tried to get rid off the VA trails in a hurry and in an unusual quick and sloppy way. The way they did things it was obvious they did not value the future of relationships with independent agents. They could have approached us, give us a year before making compensation change and offer some type of compromise if the agents selling these VA"s continued to sell other ONL products. First they F@#$ and then to correct the matter their explanation was F@#$$. SO now this.

Exactly. That move was one of the biggest FU moves I have ever seen in this industry.

It showed exactly how much they valued their independent agents. Zero.

When a small carrier like that, with a very robust independent agent network, no longer values independent agents. That is a huge warning sign in many different ways.

 

[rousemark]

Sure it does. It just says, "whatever we offer at the time of conversion".

And unfortunately, that's the strongest language, not the weakest...

I know they are not a huge term company but Columbian has a special WL plan they use for conversions only. They just changed it recently. A lot of companies do this.

 

[Tahoe Ray]

I know they are not a huge term company but Columbian has a special WL plan they use for conversions only. They just changed it recently. A lot of companies do this.

Yep....several companies have "conversion only" permanent products. That's why I said that the policies with "convert to anything we have" is the best language, but you still have no guarantees of what you end up with.

 

[pfg1]

Exactly. That move was one of the biggest FU moves I have ever seen in this industry.

It showed exactly how much they valued their independent agents. Zero.

When a small carrier like that, with a very robust independent agent network, no longer values independent agents. That is a huge warning sign in many different ways.

They screwed me out of a commission a few years back... I replaced a term policy written by another agent, in another state at 19yrs into the 20yr term. Client wanted ON, he liked them (and as someone mentioned, their term was very competitively priced back then) and they came back and said it was considered an internal replacement and I get ZERO.

I told them to pound sand, and never wrote another policy. So glad I didn't. What a mess this is likely going to be, especially for folks that bought PMax or 10pay policies... they will be underwater dramatically and won't have an option to move to a better company/policy without taking a pounding.

I guess David took his ball and left. I'm sure he's not happy right now, especially since he's working in the ON career side. Hopefully he will chime back in, none of this is a dig on him - he's a great guy.

Fwiw, I'm not an accountant or CPA but I don't agree with his CPA math. I'm sure if I looked hard enough I could find 6 CPA's that would line up with about anything and spit out numbers and language to support it, especially if those numbers led to big commissions. Moving huge amounts of money from 401k's into annuities, then taking 10% out each year to fund PLI... it doesn't take many clients to have a good year. This industry is full of those types of deals. I hope their E&O doesn't get tested on that stuff, I could easily see clients wanting to sue if it turns out the rug has been pulled out from under them. I hope not, that won't be good for anyone.

 

[Lloyds of Lubbock]

It will be interesting to see to see where his breakaway league ends up putting their business.
Lafayette life is my bet.

 

[Allen Trent]

That pretax income history does not give the warm and fuzzies. There are huge swings there. Not just talking about 2019. They have had 3 negative years since 2011. Maybe those were accounting issues as well. But even the positive income has HUGE swings in it.

This situation certainly shows that we need to dig into carrier financials more than most of us do. Im including myself in that too. I never considered ON to be financially unstable to that extent. Small carriers will see more fluctuations naturally. But those are some large swings ON has seen. At least it seems so to me.

an industry peer that lives near OHN said there were about 50 layoffs in 2018, 300 in 2019 & at least a couple dozen or more in 2020. that has to be almost a 1/3 or more of their workforce eliminated in 2 years or so. Expense ratios normally improve a ton when you amputate those levels of payroll expenses, but not if the premiums or assets generating revenues in the divisor of the equation dropped as fast or faster.