What You Must Know
- Ohio Nationwide stopped promoting new variable annuities and paying trailing commissions in 2018.
- Constellation acquired it in 2018 and has promised to speculate $500 million.
- Underneath the brand new AuguStar model, the corporate plans to difficulty a full line of mounted and variable annuities.
Constellation Insurance coverage immediately mentioned its new AuguStar insurance coverage enterprise will promote a full line of particular person annuities, not simply life insurance coverage.
Constellation — the corporate that acquired Ohio Nationwide in 2022 and promised to speculate $500 million in reviving it — mentioned the AuguStar Retirement division will write non-variable listed annuities, multi-year assured annuities, conventional variable annuities and registered index-linked annuities.
AuguStar Retirement will distribute the annuities by way of banks and broker-dealers in addition to by way of unbiased market organizations’ networks of retail brokers, the corporate mentioned.
Cliff Jack, the CEO of AuguStar Retirement, mentioned the division goals to promote merchandise that buyers can belief and perceive, utilizing expertise to automate processes as a lot as potential. “We need to supply an distinctive expertise for each the monetary advisor and the buyer,” he mentioned.
What It Means
Life insurers, their ranking companies and their regulators might have considerations about insurers’ potential to handle funding threat, however many gamers are nonetheless keen to supply your shoppers revenue safety.
The Historical past
Ohio Nationwide was based in 1909 and constructed a big, revered life and annuity enterprise. The corporate was a significant participant within the U.S. particular person variable annuity market.
Due to Ohio Nationwide’s sturdy variable annuity gross sales, the corporate ended 2015 with 87.5% of its property related to prospects’ separate accounts, in line with a monetary examination report posted by the New York State Division of Monetary Companies in June 2022.
The separate account exercise was “primarily generated from the variable annuity assure block of enterprise, which has been growing annually, and exposes the corporate to extra dangers,” in line with officers’ abstract of feedback included in a earlier examination report primarily based on the 2015 outcomes.
Firm examiners advisable that Ohio Nationwide take into account limiting its publicity to variable annuity threat.
Ohio Nationwide responded by saying in 2018 that it could cease promoting particular person variable annuities and cease paying trailing commissions to the brokers who had bought the annuities.
Agent teams sued over the trailing fee cuts however had hassle combating the fee cuts in court docket.
