Business News
IA Purchases Prosperity's Final Expense & Term Blocks
Are you noticing a trend??
Written by: Paul Bloodsworth
July 16, 2024
[6 minute read]
Summary
IA Financial Group acquired two blocks of business from Prosperity Life Group, consisting of final expense and term life insurance policies issued by S.USA Life Insurance Company Inc. The acquisition includes over 115,000 policies worth more than $100 million in annual premiums, expanding IA’s U.S. presence.
The deal integrates Prosperity's 15,000 sales agents into IA's network, mainly American Amicable of Waco, Texas. The deal's financial details were not disclosed.
Agents are showing differing opinions...
"After recently releasing their OTP electronic signatures application, Prosperity drops the entire app?"
"Companies are dropping like flies..."
"Carriers are catching up to the agent fall out rate..."
"I wrote business with them for years, and I never had issues..."
In this article, we will highlight 2 major points:
About two-thirds of Prosperity's agents already have a contractual agreement with American Amicable.
Could this be a part of something much bigger?
Looking at the recent months alone, this does not come at great surprise that another carrier has sold off blocks of life insurance business. Prosperity has always seemed to have a solid footing inside the large IMO, Family First Life.
Though considered one of the "kool-aid" IMOs of the industry, FFL has grown to be a giant organization. Furthermore, it has been reported that at least 1/3 of Prosperity's business is written by an FFL agent.
But what's really going on with the life insurance industry?
- On June 29 of this year, Columbian Financial Group announced that it had sold off its stake in the insurance business. This comes just 2 months after AM Best downgrades its Financial Strength Rating to a measly C+!!
- During that same month, Wellabe (aka Great Western Insurance Company) sent notices to its agent pool that it was closing off blocks of its products as well. The last date to submit certain policy types will be August 31 of this year.
IMPORTANT!
Determining which type of life insurance is best for you is NOT a simple decision. It is always recommended that you seek a professional insurance advisor who is licensed to act as a fiduciary on your behalf.
There is NO consulting fee for almost all advisors in this space. If you'd like speak with a licensed advisor, click here.
So what does each of these moves have in common??
Could it be,,,,, Final Expense??
and the way that sector's business is conducted?
The final expense cat is being ejected from the bag.
That's right. Each of these recent carrier selloffs have a major component in common: FINAL EXPENSE
Each of these acquisitions primarily included the sale-off of the carriers' final expense operations...
We're not implicating that final expense life insurance is a bad product. It's certainly a huge chunk of the life insurance market, and there's a large demographic served very well by this sector of the business.
BUT, one must consider certain logistics of how the final expense business is conducted...
First of all, we're dealing with the lower end of the insurance enterprise. A large percentage of the agents who sell this stuff were sold "The Dream" job of a lifetime by savvy recruiting measures. We learned of these practices in this video here:
94% of these agents fail to remain in business for a single year.
ALSO, the target audience is a really tough demographic to keep on the books. Prosperity themselves had unofficially reported a 39% lapse rate before their final expense policies are just 12 months old.
So, I guess it all makes sense...
As one agent commented, "One after the other, after the other..."
Many speculators are simply wondering, "Who's next?"
