Ohio National Financial Services will exclusively focus on growing its life and disability income insurance product lines going forward, deciding to exit the annuity business and significantly reduce its workforce in the process.
The decision, announced Sept. 6, follows a comprehensive strategic review of Cincinnati-based Ohio National’s businesses, taking into account the continuously changing regulatory landscape, the sustained low interest rate environment, and the increasing cost of doing business, as well as growth opportunities and the company’s competitive strengths.
“As part of our strategic planning process, we have completed a comprehensive evaluation of our entire business to determine the best path forward to deliver the long-term growth and financial strength necessary to support our policyholders, customers, business partners, associates and the communities in which we operate,” said Ohio National Chairman and Chief Executive Officer Gary T. “Doc” Huffman, CLU, ChFC. “Based on this evaluation, we will be focusing Ohio National to build on our strengths in life and disability income insurance. We will also continue to grow our Latin American operations.”
The rollout, implementation and execution of the company’s new focused growth strategy will be led by recently elected President and Chief Operating Officer, Christopher A. Carlson. Huffman, who served as president since 2010, will continue as Chairman and Chief Executive Officer.
Under the new plan, effective this Saturday, Sept. 15, the company will no longer accept applications for annuities or new retirement plans, while continuing to service and support existing clients in both businesses. As a result of this decision, the company will reduce its workforce by approximately 300 positions.
“We strongly believe this strategy will provide us with greater long-term financial flexibility to invest in product, technology and services that provide value to our policyholders and customers,” said Carlson.
Changes support continued policyholder benefits and protection
“Making these changes enables us to enhance our unique value proposition as we continue building trusted relationships with our network of financial professionals and offering the highest quality products with the benefits and protection our customers need,” Huffman said. “This value proposition has allowed Ohio National to grow our life insurance business at rates well above industry averages. Along with our strong growth in disability insurance, we are confident that our long-term prospects are bright.”
According to the Cincinnati Business Courier, the culling of its employment by about 300 as a result of the strategy shift is than 20% of Ohio National’s nearly 1,300 employees. It will have about 1,000 employees, including about 900 at its home office in Cincinnati, when the job cuts are completed. Ohio National is helping its employees who are losing their jobs with a benefits package based on years of service, continuation of other benefits and outplacement assistance, according to the Courier.
Ohio National has consistently been among the top 20 sellers of variable annuities. While exceeding its fixed indexed annuity sales goal by 9.4% in 2017, the company’s annuity sales declined 13% to $1.3 billion for the year, accounting for more than half of Ohio National’s $2.2 billion in revenue. According to its most recent annual report, of the company’s $42 billion in total assets under management, $24.9 billion, or 59%, is from annuities.
Sheryl Moore, president and CEO of Wink, Inc., which publishes Wink’s Sales & Market Report, said she was shocked and saddened by the news that Ohio National is leaving the annuity market.
“This is a second company leaving the annuity market in nine months (Voya, last December). If variable annuities account for 95% of Ohio National’s annuity business, the reserving for the living benefits are undoubtedly an unwanted distraction,” Moore said. “Variable annuity sales just haven’t been what they used to be and fixed annuity sales have been paltry with interest rates at historical lows. While Ohio National has had some successes with their indexed annuities, I can understand the company wanting to exit the annuity business altogether, given their recent record sales of whole life insurance and disability products.”
Moore points out the fear of outliving their retirement income is frequently reported as the No.1 fear of Americans, “and yet insurance companies seem to keep exiting the market that is most suited to address that concern. It is distressing.”
About Ohio National: Since 1909, Ohio National has been committed to helping individuals, families and businesses protect what matters most. Through its network of financial professionals across 49 states (all except New York), the District of Columbia and Puerto Rico, Ohio National provides the insurance products and financial protection our policyholders need. As of December 31, 2017, its affiliated companies have $42.0 billion total assets under management. Products are issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Please visit ohionational.com for more information and for the latest company updates, connect with Ohio National on LinkedIn, Facebook, Twitter and Instagram.