State Farm suspends sales Phoenix Cos

 

Friday, Mar 06,2009, 10:14:26 AM   Click:

State Farm suspends sales Phoenix Cos Diane Levick The Hartford Courant, Conn. McClatchy-Tribune Regional News
March 5 - The Phoenix Cos. already suffered a stinging blow Wednesday as State Farm - the company which it depends for much of the work - suspension of sales of insurance policies and annuities Phoenix.

"The main reason is the recent decline in financial strength rating agencies," said spokesman Dick Luedke State Farm. He said that the stoppage of sales was for an indefinite period.

State Farm, the largest distributor of products from Phoenix, was 68 percent, or $ 430 million, the company based in Hartford annuity deposits last year - money invested in the annuity by new customers or existing. The Bloomington, Ill.-based insurer is responsible for 27 percent, or $ 91.6 million, of Phoenix of total new life sales in 2008, measured by premiums.

The Phoenix Companies Inc. 's total sales were already before the latest coup for State Farm. Life insurance has dropped by 71 per cent of sales in the fourth quarter of 2008, deposits and rents fell 37 percent.

Asked about the future of Phoenix, spokeswoman Alice Ericson would say only that the company is still "financially strong" and "we have our plans, we have put forward to address the realities of the economy and where we are now. "

The company has 600 employees in Hartford.

Phoenix, who suffer from deflated investment, stock market volatility and a weakening economy, had a net loss of $ 378.3 million for the fourth quarter of 2008 and $ 726 million throughout the year.

CEO Dona D. Phoenix Young has recognized the company last Friday shake when she told analysts, "Phoenix is at a crucial point in our history, and management is fully aware that times are harder than any of us have experienced in our lives. "

Andrew Kligerman, an analyst at UBS, said that the management, Phoenix and other insurers put priority on maintaining their balance sheet as on the incorporation of new companies.

"If new business is temporarily frozen" in Phoenix, "this is not the end of the world," Kligerman said Wednesday.

AdminState the action of the farm, though, highlights the potentially profound impact that low ratings can have on companies such as Phoenix. Agents and brokers who seek to protect themselves and their clients may recommend policies and annuities businesses more highly rated.

Although the State owns the farm a little over 5 percent of Phoenix, this factor has no impact at all on our decision to indefinitely suspend marketing their product, "says Luedke.

There has been much speculation about whether Phoenix would be sold, but Luedke not comment on the fact that State Farm is interested in buying a larger piece or all of Phoenix.

Standard & Poor's has downgraded the financial strength rating of the subsidiaries of Phoenix Monday a notch to BBB, which is still in "good" range. But other companies are still rated A or better.

Phoenix was the sale of its products by agricultural enterprises of State since 2001, the same year that State Farm has purchased a stake of Phoenix.

Phoenix split its asset management business - Virtus Investment Partners - December 31 to focus on life insurance and annuities. Phoenix has long complained that the asset management operations have been dragging down the returns of the entire company, leading to pressure on its stock price. Phoenix stock closed at 44 cents per share Wednesday, up 6 cents in a rising market.

Phoenix, trying to position itself for the future, is looking for new distribution channels for its main products, broaden the range of alternatives to retirement, she sells and is seeking partners for the labeling of companies private. In these firms, Phoenix to design a product for a partner company, which sells under its own name. Phoenix take a share of financial risks and share profits.

Phoenix is also being reduced by more than 250 jobs, or about 25 percent of its 1,100 employees companywide, and eliminate shareholder dividends. S & P said the layoffs would reduce the ability to bring new business, "which could put more pressure on his position."

Connecticut Insurance Commissioner Thomas R. Sullivan said Wednesday in an e-mail that the Insurance Department continues to monitor closely the financial situation of insurance companies operating here. This case is no different. We will continue to do our job to ensure policyholders that the interests are protected. "

To see more of The Hartford Courant, or to subscribe to the newspaper, go to http://www.courant.com/. Copyright (c) 2009, The Hartford Courant, Conn. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303 , Glenview, IL 60025, USA. March 5 - The Phoenix Cos. already suffered a stinging blow Wednesday as State Farm - the company which it depends for much of the work - suspension of sales of insurance policies and annuities Phoenix.