Thursday, May 12, 2005
For MetLife watchers, some updates and surmises
LOOKING AHEAD by Wally Dobelis
There are financial reasons behind the Met’s push for photo key-cards. The company needs money, and the ST/PCV tenancy, protected by rent control/rent stabilization, stops them from maximizing their rental income. The landlords feel deprived of revenue by certain tenants who flaunt the rent laws, either housing illegal subtenants or subletting the premises while spending significant time in vacationland, thus no longer qualifying as full-time tenants. The Met would like to cash in and try to move the guilty parties out, opening the space for market-rate rentals. But the key-cards are legitimately resisted by people who object to an unconscionable regimentation and invasion of privacy, which inhibits their ability to admit housekeepers, caretakers and other bona-fide visitors. The insurer is bound to continue the pressure, in courts and otherwise, without resorting to overt “rough landlord” tactics, which would impair their reputation as the good Snoopy company, protectors of widows and orphans.
Why the pressure? Well, the Met, low on new sales since certain scandals of the 1980s, demutualized in 1998, selling stock to acquire some operating capital and rebuild the sales force. Robert Benmosche, the architect of the old Met’s turning into a stock company, came in 1995, from PaineWebber with orders to rejuvenate the “sleeping giant.” The demutualization was a success, with stock prices climbing. Meanwhile, the low interest rates kept the sales of traditional ordinary life insurance down, the stockholder directors wanted better results, and Benmosche early in 2005 bought Travelers Life and Accident, a Hartford stock company, for 11.5B, from an old insurance smarty, Sandy Weil, who had built his Firemen’s Life in 20 years into an insurance and banking empire, the Citicorp.
Weil sold out, ostensibly because his money is best employed in high-return banking (a strange turnaround, since in the 1990s he offered to buy the Met). Met bought because of a product and marketing fit, at some pain, having to sell the old 1893 landmarked flagship, One Madison, with the gold dome and N. C. Wyeth’s paintings of Puritans in the ground floor lobby offices, to a developer who will turn the tower into coop apartments, for $918M. The new flagship 200 Madison, the former PanAm Building, went to Tishman-Speyer for $1.7B. The Met is also selling $11B worth of unregistered and new shares. May stock prices have jumped, on news of good investment income and annuity sales, but more cash is needed, and the ST/PCV activity goes on.
Is the Met that cash-strapped? My insurance sources unearth this story.
In the 1980s a former football coach, A.L. Williams, came up with a mass marketing idea that upset the staid old insurers no end, making a big case of the slogan “buy term and invest the difference.” His company, Milico, hired young salesmen by the hundreds to sell term insurance with the catchy slogan to friends and family members, and dropped them as soon as the leads petered out. Nevertheless, some 180,000 lads followed the “Coach,” who ran the organization like a team. The sales involved many replacements of old cash-value policies, and the Coach preached hate towards the opponents, using phrases such as “wet the Met” and proclaiming a worse rhyming fate for Prudential Life. The Coach eventually departed, connected with a “twisting” fraud, and the organization was bought by Weill, became Primerica Life and remains his, although Travelers is joining the Met.
Now enters a watcher and critic of the insurers, actuary Joseph Belth of Indiana U., who publishes a pricey monthly journal, The Insurance Forum, exposing tricksters and trying to keep the industry on course (everyone subscribes, to catch any criticisms first-hand and to see what the competition is pulling). Belth believes in permanent cash-value life insurance as premier investment, since the excess earnings of the part of the premiums we the insureds pay as reserves towards future claims increase the policy’s value, just like a mutual fund, but are not taxable as income to the beneficiary. A truly good deal, provided the insureds do not make withdrawals ahead of time. Now, he and another ordinary life guru, Alan Press, have discovered that the Met, as part of thee Travelers deal, is counting on Citicorp bank branches, Smith-Barney and, shockingly, Primerica, as outstanding distribution channels of the Met product. Shockingly, because Primerica during the mid-1990s was responsible for nearly half of life insurance replacement activities (the skeptics claim “churning”), including some affecting the Met’s traditional product, and Primerica, though cleaned up, is still active, even pushing the lawmakers for a term-only insurance agents’ license. The surmise is that the Met must be really worrying about the stockholder reactions to a drop in life sales, to resort to courting the Coach’s progeny.
With all this going on Benmosche has announced his retirement at 61, come next spring. His replacement, Robert Henrikson, 58, who has been the Met’s president since April 2004, has a lot of work ahead of him.
There are financial reasons behind the Met’s push for photo key-cards. The company needs money, and the ST/PCV tenancy, protected by rent control/rent stabilization, stops them from maximizing their rental income. The landlords feel deprived of revenue by certain tenants who flaunt the rent laws, either housing illegal subtenants or subletting the premises while spending significant time in vacationland, thus no longer qualifying as full-time tenants. The Met would like to cash in and try to move the guilty parties out, opening the space for market-rate rentals. But the key-cards are legitimately resisted by people who object to an unconscionable regimentation and invasion of privacy, which inhibits their ability to admit housekeepers, caretakers and other bona-fide visitors. The insurer is bound to continue the pressure, in courts and otherwise, without resorting to overt “rough landlord” tactics, which would impair their reputation as the good Snoopy company, protectors of widows and orphans.
Why the pressure? Well, the Met, low on new sales since certain scandals of the 1980s, demutualized in 1998, selling stock to acquire some operating capital and rebuild the sales force. Robert Benmosche, the architect of the old Met’s turning into a stock company, came in 1995, from PaineWebber with orders to rejuvenate the “sleeping giant.” The demutualization was a success, with stock prices climbing. Meanwhile, the low interest rates kept the sales of traditional ordinary life insurance down, the stockholder directors wanted better results, and Benmosche early in 2005 bought Travelers Life and Accident, a Hartford stock company, for 11.5B, from an old insurance smarty, Sandy Weil, who had built his Firemen’s Life in 20 years into an insurance and banking empire, the Citicorp.
Weil sold out, ostensibly because his money is best employed in high-return banking (a strange turnaround, since in the 1990s he offered to buy the Met). Met bought because of a product and marketing fit, at some pain, having to sell the old 1893 landmarked flagship, One Madison, with the gold dome and N. C. Wyeth’s paintings of Puritans in the ground floor lobby offices, to a developer who will turn the tower into coop apartments, for $918M. The new flagship 200 Madison, the former PanAm Building, went to Tishman-Speyer for $1.7B. The Met is also selling $11B worth of unregistered and new shares. May stock prices have jumped, on news of good investment income and annuity sales, but more cash is needed, and the ST/PCV activity goes on.
Is the Met that cash-strapped? My insurance sources unearth this story.
In the 1980s a former football coach, A.L. Williams, came up with a mass marketing idea that upset the staid old insurers no end, making a big case of the slogan “buy term and invest the difference.” His company, Milico, hired young salesmen by the hundreds to sell term insurance with the catchy slogan to friends and family members, and dropped them as soon as the leads petered out. Nevertheless, some 180,000 lads followed the “Coach,” who ran the organization like a team. The sales involved many replacements of old cash-value policies, and the Coach preached hate towards the opponents, using phrases such as “wet the Met” and proclaiming a worse rhyming fate for Prudential Life. The Coach eventually departed, connected with a “twisting” fraud, and the organization was bought by Weill, became Primerica Life and remains his, although Travelers is joining the Met.
Now enters a watcher and critic of the insurers, actuary Joseph Belth of Indiana U., who publishes a pricey monthly journal, The Insurance Forum, exposing tricksters and trying to keep the industry on course (everyone subscribes, to catch any criticisms first-hand and to see what the competition is pulling). Belth believes in permanent cash-value life insurance as premier investment, since the excess earnings of the part of the premiums we the insureds pay as reserves towards future claims increase the policy’s value, just like a mutual fund, but are not taxable as income to the beneficiary. A truly good deal, provided the insureds do not make withdrawals ahead of time. Now, he and another ordinary life guru, Alan Press, have discovered that the Met, as part of thee Travelers deal, is counting on Citicorp bank branches, Smith-Barney and, shockingly, Primerica, as outstanding distribution channels of the Met product. Shockingly, because Primerica during the mid-1990s was responsible for nearly half of life insurance replacement activities (the skeptics claim “churning”), including some affecting the Met’s traditional product, and Primerica, though cleaned up, is still active, even pushing the lawmakers for a term-only insurance agents’ license. The surmise is that the Met must be really worrying about the stockholder reactions to a drop in life sales, to resort to courting the Coach’s progeny.
With all this going on Benmosche has announced his retirement at 61, come next spring. His replacement, Robert Henrikson, 58, who has been the Met’s president since April 2004, has a lot of work ahead of him.
# posted by Wally Dobelis @ 5:02 AM 
