From an economic standpoint, 2014 remained much the same as the prior year. The industry ended 2013 with some hope for a slow recovery in interest rates. However, by mid-year, our industry was again dealing with the all-too-familiar challenges of offering competitive products while maintaining profitability in a historically low interest rate environment. Generally, the economy seemed to show slow growth, with various bright spots reported in key economic indicators. The stock market also continued to perform well, while corporate profits remained strong. This seemingly mixed bag created an environment that offered both challenges and opportunities.
Fortunately at Columbus Life, due to our financial strength and fiscally conservative approach to the business, we continued to successfully navigate economic challenges and respond to opportunities. While no company is immune to the low interest rate environment, we have managed to successfully weather this challenge—which seems as though it will continue until at least mid-2015. Our growth trajectory has continued with life premium, life policies and annuity premium all showing positive growth for the year (the continuation of a five-year trend). We continue to believe that by leveraging progressive technology, offering best-in-class products and features, and delivering personal, high-touch support to independent producers, top-line and bottom-line growth is still possible.
Goals for 2015
Our goals for 2015 focus on introducing new products and enhancements that meet producer and consumer needs, developing new innovative technologies that make doing business with Columbus Life even more attractive, improving the speed and efficiency of our underwriting processes, and continuing our expansion throughout ethnically diverse markets. All of these key initiatives will be backed by our efforts to raise the awareness of Columbus Life’s unique story and strengths among current and potential producers, including promoting our industry-leading financial strength, our high-touch relationships and our unwavering commitment to serving independent producers.
Throughout 2015 we will continue refining our digital applications to make doing business with us easier, faster and more efficient. Recent additions such as our iGO e-App1 electronic application let producers submit applications quickly, easily and in good order to the home office. Our CLIC Quote mobile app quickly quotes product prices, while our Tax App provides calculators, tax tables and more. In 2014, downloads of the Tax App nearly doubled, making it our most popular mobile app for producers. In 2015 we will continue creating new technology to become one of the fastest in “submission to commission,” including proactive case status alerts for producers and electronic policy delivery for clients. Additionally, all of our consumer- and producer-facing properties will be mobile-friendly by the end of 2015.
Even in a technology-driven world, we find the most value in high-touch, personal interactions with independent producers. This year we will enhance our onboarding procedures to create a personal, individualized process that attracts and retains top producers. We plan to combine the latest technology—including online webinars and video conferencing—with face-to-face visits to build strong, high-touch connections with our newest producers.
In recent years we have established several key opportunities in ethnically diverse markets and expect these to grow in 2015. Throughout the last five years we have experienced tremendous growth in the Asian-American market, which now accounts for more than 30 percent of our business. Building on this momentum we launched our first video series on YouTube in 2014. Our Columbus Life Lessons series features Asian-Americans speaking about definitive life lessons in their native Chinese or Korean. While the videos provide an avenue for financial representatives and clients in Asian-American markets to connect, they also highlight insights and understanding applicable to anyone regardless of the language they speak.
All of these initiatives will allow us to better share the Columbus Life story and increase awareness of the Columbus Life brand among our current producers, new producers and consumers alike. At Columbus Life we believe we have one of the best stories in our industry—a heritage of building personal, high-touch relationships while being part of one of the strongest life insurance groups in the world as a member of Western & Southern Financial Group. We are fortunate to partner with accomplished producers who have stepped up to the next level of success at Columbus Life, and we strive to contract with even more top producers as we spread the word about Columbus Life as an elite carrier of choice.
Industry and Regulatory Trends and Challenges
As we look ahead to 2015, we are concerned about the historically low interest rate environment that has continued longer than many expected and which created pricing problems and profitability challenges.
Like other carriers in our industry, we constantly balance maximizing profitability versus growing and increasing sales. Our approach to meeting this challenge will be two-fold: 1) striving to ensure we have an appropriate balance of cash accumulation, current assumption and guaranteed UL premium, and 2) continuing to effectively manage our investment portfolio while looking for additional yield in the appropriate places.
We have always believed in providing a balanced portfolio without focusing on any one product type, and we believe this approach will continue to serve us well in the low interest rate environment. Additionally, we will look to broaden our interest-sensitive products by adding an indexed annuity to our portfolio. These two approaches will help provide diversification against market changes, deliver more options to clients and balance out our product profit sources.
Due to current budget deficits at the federal level there is constant discussion about tax reform, which will likely continue in 2015. How that will impact our industry remains to be seen, but one proposal by government leaders is a tax on the cash buildup in life insurance policies. Our industry should continue its collective effort to educate lawmakers on the implications of such a tax, and we believe this type of change is unlikely in 2015. However, we will continue to monitor discussions like this at the federal level.
Finally, as the demographics and concerns of American consumers change, our industry must also be prepared to adapt to modern priorities. The traditional “nuclear” family—defined as married husband and wife with children—continues to diminish. Current estimates indicate that as few as 20 percent of U.S. households fall into this category.2 This may naturally reduce the need for the traditional benefits of life insurance and change the sales approach and value statements. However, other demographic changes, including the aging of the baby boomer generation and increased longevity for all Americans, increase consumer needs for retirement planning and sources of funds to meet medical challenges. Our products can help meet these needs through the other benefits we offer—cash accumulation in permanent products and access to funds for medical needs through “living benefits” riders.
Recognizing these industry changes and potential regulatory challenges, Columbus Life is well-positioned for growth in the years ahead. While maintaining our philosophy of high-touch relationships, we will continue to implement technological advances that make doing business faster and easier. Using our company’s compelling story, more superior products and financial strength, we will continue to grow the number of producers representing Columbus Life while striving to maintain the loyalty and productivity of our currently appointed independent financial professionals. But above all, we will continue to make decisions and begin new programs with independent producers in mind—putting producers first. [SJS]
1. iGO e-App is a registered trademark owned by and used with the permission of iPipeline.
2. Source: U.S. Census Bureau, Current Population Survey, 2013 Annual Social and Economic Supplement.
Columbus Life Insurance Company, Cincinnati, OH, is licensed in the District of Columbia and all states except New York.