Guggenheim scoops up insurer to build fixed indexed annuities
October 10, 2011 by Darla Mercado
Gives firm 10th-place market share, wider distribution
By Darla Mercado
October 7, 2011
Guggenheim Partners LLC has bought EquiTrust Life Insurance Co., ramping up
its presence in the fixed-indexed-annuity realm.
The deal was announced in a filing with the Securities and Exchange
Commission today. Guggenheim bought the insurer from FBL Financial Group Inc.
for a preliminary purchase price of $440 million in cash. The firm expects the
transaction to close around Dec. 30.
Guggenheim will be stepping up its profile in the fixed-indexed-annuity
market through the purchase. It currently owns Security Benefit Life Insurance
Co., which sits at 12th place among indexed-annuity sellers, according to
AnnuitySpecs.com’s Indexed Sales & Market Report for the second quarter of
this year.
Meanwhile, EquiTrust sits at 15th place, and a combination of the two will
give Guggenheim about a 4.16% share of the indexed-annuity marketplace, equal to
being the No. 10 player in the industry.
The new arrangement will give Guggenheim a wider breadth of distribution
partners overall.
Security Benefit currently offers an exclusive indexed annuity via an
arrangement with field marketing organization Advisors Excel and is a fairly new
entrant to that product marketplace. Meanwhile, EquiTrust has been around since
1997 and has a variety of other field marketing organizations that sell its
indexed annuities, said Sheryl Moore, president of AnnuitySpecs.
Other indexed-annuity experts noted that from a distribution point of view,
EquiTrust’s business might be more compatible within Guggenheim’s structure
compared with where it had fit with FBL, which also sells property/casualty
insurance and life coverage.
“FBL’s customer base is made of people in the rural markets; it’s a very
stable product line,” said Judith Alexander, director of sales and marketing at
Beacon. “In the independent-agent channel, things are far more competitive. It
might have been a better fit with Guggenheim.”
“We’re narrowing our focus for FBL more on the Farm Bureau niche,” said Nancy
Doll, spokeswoman for FBL. The Farm Bureau niche largely offers life insurance
products through a career agent force, while EquiTrust had sold its products
through independent agents.
Guggenheim spokeman Jeffrey Kelley did not immediately return a call for.