Ohio National to end Variable Annuity brokerage arrangements

[scagnt83]

I agree with Pfg1. I cant imagine them doing away with the life side. It's their core product, and as far as I know, its profitable.

After this, their BD will def be gone in the near future imo.

If they cut out life sales, all they are left with is DI and Fixed Annuities. Neither are a core product for them. They did just revamp their DI and its now very strong. They would need to do the same with their Fixed Annuities if they cut out life insurance... their FAs kinda suck last I checked...

 

[VolAgent]

What the two wise men said. Life is a core product and Ohio National would have a hard time surviving on just DI and fixed annuities. Also, no indications at all that their life book is unprofitable.

If you are a fan of their core products, life and DI, this is a good thing. They just ditched a huge uncertainty and reserve drain. When the market eventually turns bad, and it will, those VA riders are going to hurt big time. The fewer they write and the more that get moved away, the better off they will be when it happens.

 

[DHK]

I agree with Pfg1. I cant imagine them doing away with the life side. It's their core product, and as far as I know, its profitable.

After this, their BD will def be gone in the near future imo.

If they cut out life sales, all they are left with is DI and Fixed Annuities. Neither are a core product for them. They did just revamp their DI and its now very strong. They would need to do the same with their Fixed Annuities if they cut out life insurance... their FAs kinda suck last I checked...

I disagree with the idea of Ohio National cutting out their BD. That doesn't have nearly the same risk factors to the general account as actually manufacturing a product with income guarantees.

However, Ohio National's core product is their life insurance portfolio. Anyone who has attended their regional conferences know that that's their focus. ONFS seems to give "lip service" to every other product line they have (or had).

 

[scagnt83]

I disagree with the idea of Ohio National cutting out their BD. That doesn't have nearly the same risk factors to the general account as actually manufacturing a product with income guarantees.

However, Ohio National's core product is their life insurance portfolio. Anyone who has attended their regional conferences know that that's their focus. ONFS seems to give "lip service" to every other product line they have (or had).

Excellent point. But I think it all depends on how much of their overall profits are attributed to the BD. VAs ran through the BD right? I would guess that is a HUGE chunk of the BDs business.

I heard that ON recently revamped their 401k product to make it a Non-registered Group Annuity... which means it does not have to run through their BD. Perhaps they are just trying to hit that niche market now that the whole fiduciary debate is behind us and there is clear guidance on it. Or maybe they are just preparing for a post BD existence? Or maybe both?? Interesting times.

 

[DHK]

I may be reading your post differently than you're intending.

We're actually talking about two different things.
1) There's Ohio National's annuity products that they manufacture and sell both internally with their captive agent (and independent) registered field force, and externally through broker/dealers who have selling agreements in place (or did).

Internally, these products would not "go through the grid" as they had their own separate internal commission structure. (I see the structure on my copy of the PGA comp rates.) Externally with outside B/D's, they would go through their company's grid.

2) There's Ohio National's broker/dealer ONESCO - that serves registered reps that are registered with them - including those through their captive agencies who can sell other company's mutual funds and their variable annuities. I can only see that as a profit center - aside from compliance, regulations, etc.

I don't necessarily see any reason for Ohio National to close up ONESCO or merge it with any other broker/dealer... unless they're going to completely abandon the captive agency model entirely. (I suppose that could happen?) But even American National still has a sales and service field force, even if they aren't registered reps.

They may choose to become a pure product manufacturer and limit their liability to avoid any future issues with DOL or other fiduciary issues.

 

[scagnt83]

I may be reading your post differently than you're intending.

We're actually talking about two different things.
1) There's Ohio National's annuity products that they manufacture and sell both internally with their captive agent (and independent) registered field force, and externally through broker/dealers who have selling agreements in place (or did).

Internally, these products would not "go through the grid" as they had their own separate internal commission structure. (I see the structure on my copy of the PGA comp rates.) Externally with outside B/D's, they would go through their company's grid.

2) There's Ohio National's broker/dealer ONESCO - that serves registered reps that are registered with them - including those through their captive agencies who can sell other company's mutual funds and their variable annuities. I can only see that as a profit center - aside from compliance, regulations, etc.

I don't necessarily see any reason for Ohio National to close up ONESCO or merge it with any other broker/dealer. unless they're going to completely abandon the captive agency model entirely. (I suppose that could happen?) But even American National still has a sales and service field force, even if they aren't registered reps.

They may choose to become a pure product manufacturer and limit their liability to avoid any future issues with DOL or other fiduciary issues.

Yes, ON VAs could be sold through other BDs. But how much of ONESCOs business do you think are ON VAs? Id guess in the 30%-50% range. It just doesnt seem to make much sense for an insurance carrier to have a BD when they have no products that run through a BD. But who knows what they are thinking in the boardroom.

 

[Golfnut2112]

I may be reading your post differently than you're intending.

We're actually talking about two different things.
1) There's Ohio National's annuity products that they manufacture and sell both internally with their captive agent (and independent) registered field force, and externally through broker/dealers who have selling agreements in place (or did).

Internally, these products would not "go through the grid" as they had their own separate internal commission structure. (I see the structure on my copy of the PGA comp rates.) Externally with outside B/D's, they would go through their company's grid.

2) There's Ohio National's broker/dealer ONESCO - that serves registered reps that are registered with them - including those through their captive agencies who can sell other company's mutual funds and their variable annuities. I can only see that as a profit center - aside from compliance, regulations, etc.

I don't necessarily see any reason for Ohio National to close up ONESCO or merge it with any other broker/dealer... unless they're going to completely abandon the captive agency model entirely. (I suppose that could happen?) But even American National still has a sales and service field force, even if they aren't registered reps.

They may choose to become a pure product manufacturer and limit their liability to avoid any future issues with DOL or other fiduciary issues.

Ohio National does not have a captive sales for force, depending on the state you live you are either a broker or a career agent. I am in a career agency state and been with them for 6 years but only wrote a handful of cases. My broker dealer used to be ONESCO but I moved around a year and a half ago also their annuity products no longer have a separate schedule and DO run thru the grid.
I agree with scagnt83 they have no need for ONESCO.

 

[tetrix]

I was reading in the article here that
LPL is “disappointed by the carve-out of this specific block of business, as we know it will negatively impact you and your business,” Pettman said, informing advisors that LPL is “actively challenging” the issuer to reverse their decision.

“We will make it clear to all of our other annuity partners that the Ohio National decision regarding future compensation is unacceptable,” he said. “We are currently evaluating all annuity sponsor contracts and seeking to identify anything we can legally change or amend in order to protect your commissions in the future.”

Is there anything they can realistically do?

 

[pfg1]

Excellent point. But I think it all depends on how much of their overall profits are attributed to the BD. VAs ran through the BD right? I would guess that is a HUGE chunk of the BDs business.

I heard that ON recently revamped their 401k product to make it a Non-registered Group Annuity... which means it does not have to run through their BD. Perhaps they are just trying to hit that niche market now that the whole fiduciary debate is behind us and there is clear guidance on it. Or maybe they are just preparing for a post BD existence? Or maybe both?? Interesting times.

SC - that 401k product has been that way for a while, and was something that was allowed in certain states - where non security licensed reps could sell it. However, its gone also now. (it was temporarily shelved for non BD reps during the fiduciary rule debate)

Their DI is very good.

I personally think its a good move for them cutting out the stuff they aren't all in on.

 

[PA Bill]

Well, these annuikty outfits have been ripping the public off for years. Only a matter of t

WHAT!?!?! That is crazy. And of all the companies to do that Ohio National? I always worry that the fixed indexed carriers will pull this one day as well.

Well, these annuity outfits have been ripping the public off for years. No surprise they are now setting their sights on the agents. I mean, who gives a rat's ass about agents?