Ohio National - Demutualization

[pfg1]

So we know they are trying to go through with the sale. Voting has been sent out, and apparently a "payout" or "settlement" has been offered to clients, on the demutualization.

Anyone familiar with that that actually looks like for the customers?

I wonder what the future holds for clients holding large WL policies?

 

[Tahoe Ray]

So we know they are trying to go through with the sale. Voting has been sent out, and apparently a "payout" or "settlement" has been offered to clients, on the demutualization.

Anyone familiar with that that actually looks like for the customers?

I wonder what the future holds for clients holding large WL policies?

No idea but I would also wonder what that looks like for an agent who has their pension/profit-sharing thing whatever they call it.

I'm going to guess "not good" but I really have no idea how that would work.

 

[somarco]

Some years ago MONY demutualized. I had a permanent (old fashioned WL) policy with them. Got a small "dividend" (or whatever they called it) after it all went through.

Same happened with a Maccabees Mutual UL.

 

[Tahoe Ray]

Some years ago MONY demutualized. I had a permanent (old fashioned WL) policy with them. Got a small "dividend" (or whatever they called it) after it all went through.

Same happened with a Maccabees Mutual UL.

Same w/ John Hancock.

 

[DHK]

The inforce illustration software can show the estimated member considerations.

General consensus... it sucks. And it's all over the board in terms of range.

I'm sure it's calculated similarly as dividends are, but it's not a dividend.

This is my mother's policy. The estimated member consideration is based on the policy having been in-force for 5 months (placed November 2020; March 2021 announcement).



But considering the future performance potential of this policy... Ohio National has made a material change in how they plan to treat in-force business. They are absolute fools to believe that this won't trigger a hemorrhage of business to be transferred to other carriers.

This is a 10-pay policy. The original policy had a projection of $2,198 of a dividend in year 11.

While we all know that dividends are not guaranteed, we should be able to expect something AROUND that figure. Maybe within a few hundred dollars?

Not even close. It now projects a dividend of $113 (including the additional consideration is paid to the policy).



That's not a mere "adjustment". That's an insult and a complete abandonment of what this company had previously promised.

Why is that? It's because they decided that "a dividend is merely the return of unused premium" and "if there's no premium, there's nothing to return".

I will reiterate that the guaranteed columns are the exact same. I trust Ohio National would pay out a death benefit.

But for what their products were previously built to do... they'll see a huge outflow of 1035 exchanges... on those who are insurable.

Those who are not... they'll stay and pay out claims sooner. (Adverse selection.)

OR they may need to consider 1035 to NQ annuities just to get away from a company who is doing a complete 180 from what they previously stood for.

It's sad to see what is happening with this company that was once a "hidden jewel" in the industry.

But I cannot trust anything they say anymore.

We are in the insurance, trust, and contracts business... and I cannot use a company where they say one thing and do another.

Their uniqueness... is finished.

"How will dividends work in the future?" (COMPLETE LIES!)

 

[DHK]

Constellation value proposition: "Preserving Mutuality without Being Mutual" - BS!

 

[scagnt83]

David, Im curious what the plan is for policies such as that? Assuming they are insurable, are you recommending they take the loss and move on? Minimum premiums until they break even? You have spoken before about the plan working even with guaranteed numbers, does that mean you will keep a policy like that in force moving forward?

 

[DHK]

Those who are insurable... they'll (most likely) be moved. The timing will depend on the age of the policies. We're seeing that policies that are at least in year 3 and older can still have very good cashflows after year 10. At least they would be with a company committed to dividend performance.

My mother... she's more insurable than before. She had a non-cancerous brain tumor removed less than 5 years before getting this policy. Now that 5 years has passed, she will likely get the same rate class, but no 'flat extra' with a new company.

Regarding the plan working with guaranteed numbers... yes, it can work better than a plan based on securities. It just won't be as high as it could've been. 3.5% to 4% cash flow is okay, but it isn't 6% or higher.

When I'm looking at a total 20-year dividend projection reduction of nearly $35,000... it's my duty to move that policy.

 

[DHK]

My plan is to do a 1035 into a new 10-pay and do a RPU in year 7 or 8.

 

[Allen Trent]

When I'm looking at a total 20-year dividend projection reduction of nearly $35,000... it's my duty to move that policy.

How can you assure under your duty that the new projected carrier will perform as illustrated? Wouldn't you have thought 15 years ago that ON would look better than a Pru or Met Life that had just went through demutualization.

What we believe is the right move won't be known until the future when the claim is settled