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September 28, 1999
O'Brien spoke Tuesday at the life insurance segment of the CIBC World Markets conference, co-sponsored by A.M. Best Co. O'Brien said the company's return on equity has grown to 11% as of June 30 from 9.6% in 1998 and is on target to reach its goal of 13% by 2000. "Our focus is not on mergers and acquisitions," O'Brien said. Since the company went public in 1995, it has focused on growing its asset-accumulation business and retirement products, he said. Pretax asset accumulation has jumped from $72 million in 1995 to $118 million in 1996, $153 million in 1997 and $193 million in 1998. Variable annuity sales have grown to $3.2 billion in 1998 from $700 million in 1994. Sales growth slowed somewhat this year, reaching $1.5 billion for the first six months of 1999, roughly the same performance as last year. O'Brien said the company earns profits from assets it puts in the bank. "As long as you keep adding assets, your base earnings will increase," he said. Several new initiatives are expected to help the company continue to grow, including alliances with certified public accountant firms, which will sell retirement products, he said. Also, the company plans to add 100 agents to its sales force in the next year. Sales agents earned an average of $115,000 in commissions during their first year in 1998, up from $37,000 in 1994, O'Brien said. O'Brien said techniques the company has learned in successful property/casualty workplace marketing could be applied to retirement-product sales. Traditionally, workplace marketing has focused on automobile and homeowners insurance. While workplace marketing involves selling twice--first to the workplace or affinity group, then to the employees or members of the group--policyholders tend to remain with the company because it is convenient to make payments and file claims. Allmerica has no plans to sell its retirement products to workplace or affinity groups in the next year, but "it is a tool that we have in place" and will consider in the future, O'Brien said. |
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Allmerica Financial Corp. plans to grow through earnings rather than through mergers and acquisitions, said Jack O'Brien, president and chief executive officer.