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September 28, 1999
During the first quarter, ReliaStar saw costs rise after nine to 10 years of growth in all of its reinsurance lines, said Robert Salipante, speaking Sept. 28 at the life insurance segment of the CIBC World Markets conference, co-sponsored by A.M. Best Co. Then, during July and August, the company began seeing higher claims in its medical reinsurance business, specifically in student health and employer stop-loss lines. So far, the company has not estimated how the losses will affect earnings but said the losses continue this month. "It's a significant but isolated event," Salipante said, adding that the business came from one managing general underwriter. "We'll put a fence around this thing, we'll terminate these contracts and we'll move forward." The company has set goals of 12% to 14% of annual earnings per share growth, and 13% growth for premiums, deposits and fee revenue. ReliaStar could fall short in the near term. "Frankly, the reinsurance has caused us to lag behind our goals," Salipante said. Reinsurance represents about 14% of ReliaStar's operating earnings, with the bulk of its growth coming from group life reinsurance. Reinsurance aside, ReliaStar continues to work toward growth through its financial education seminars, which are designed to lead people to ReliaStar products. "We're going to lead with education, not with product," Salipante said. A third of ReliaStar's new business comes through its financial-planning educational services, he said. The target: 76 million baby boomers and a potential $10 trillion wealth-transfer market. Like many other companies, ReliaStar is committed to cross-selling, with hopes that consumers will buy more than one ReliaStar product. One example includes selling an "estate in a box" package that includes a variety of estate-planning products. ReliaStar plans to target families with net worths of between $2 million and $10 million. "Cross-selling is going to define growth in the industry over the next 20 to 25 years," he said. |
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High claims costs in its reinsurance lines have caused ReliaStar
Financial Corp. to lag behind its own goals for growth, ReliaStar's chief
operating officer said.