Pacific Life takeover of former Genworth Lynchburg life operation helps stabilize the term market

Something truly remarkable has unfolded over the past 18 months in the turbulent term life marketplace.

At a point in time when a lot of carriers have wavered, flip-flopped or outright abandoned their commitment to term life, we have a story of a carrier entering the market with a strong statement that provides some much-needed stability.

It’s a story that starts back in Feb. 2016, when Genworth Financial announced its decision to suspend sales of term life insurance and fixed annuity products to focus on long-term care insurance after losses posted in 2015.

Then it was announced in April 2016 that Pacific Life – a leader in the affluent market – had reached an agreement to purchase the term life new business platform from Genworth, along with one of two of Genworth’s facilities in Lynchburg, Va. This development also meant Pacific Life would be hiring many of the former Genworth employees, as it looked to add 300 people for its new Lynchburg operation (shown at top right).

Acquiring the entire platform allowed Pacific Life to leverage the Lynchburg operation center’s experience and expertise in product innovation, service capabilities, distributor relationships, and familiarity with the independent life brokerage channel.

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At this point it is hard to see a downside to this deal. You might even call it a win-win-win-win-win:

• The independent life insurance distribution channel won, as producers and BGAs get to keep access to a proven and popular term life product.

• Middle-market consumers won, as an important term life product that can help them protect the future for their families was saved from an unwarranted banishment to the scrap heap. Additionally, that important term life product is now backed by one of the most trusted and reputable brands in the financial services industry.

• The city of Lynchburg, Va., won with 300 new jobs and a highly respected, high profile new employer in town making a $4 million investment to launch a new operation, just months after Genworth had announced the layoffs in Lynchburg.

• Genworth Financial won, as it found an ideal buyer for this profitable line of business after the company decided to exit the life insurance market.

• And finally, Pacific Life won, by achieving its desired expansion into the middle market in almost a turnkey fashion by acquiring Genworth’s life insurance technology platform, facility, and many familiar staff members in a Lynchburg operation that is rich in experience and expertise in the independent life brokerage channel.

Strategical move for Pacific Life

Make no mistake – this isn’t just about term insurance; it’s about a bigger strategy for Pacific Life, which understandably was actively seeking opportunities to expand its life insurance market share. The move allows Pacific Life to extend its ability to fulfill the financial protection needs of a broader, underinsured (middle) market without disrupting its existing distribution in the affluent market.

Before the acquisition, term life represented about 2.5% of Pacific Life’s total life insurance business. With the acquisition of Genworth’s platform, Pacific Life plans to accelerate growth into the mass market by being able to process large volumes of term applications with consistency and speed. It’s all being done through the Lynchburg office as an independent operating model.

While the sale did not include Genworth’s inforce block of life insurance business (all inforce policies, including Genworth Colony Term, Colony Term UL, universal life insurance, and long-term care insurance, remain with Genworth), the new operation’s primary focus is on term life.

In November 2016, Pacific Life introduced Promise Term, which was designed using successful elements of Genworth’s traditional term life insurance portfolio. Major differences include competitive pricing updates (including a very recent update resulting in the product showing up in the top one or two spots on quote engines about 90% of the time), the addition of a 25-year guarantee level premium period, and competitive monthly modal factor.

In late 2017, Pacific Life plans to launch a universal life insurance product, which will be available upon conversion only, is consumer friendly, and offers incentives for early conversion. In 2018, while specifics have not yet been set, the company plans to expand the product portfolio to include permanent life insurance products that meet the needs of the Broad Market.

Sales for the new Pacific Life Broad Market Channel are being led by Brian Bulakites, who joined Pacific Life as the National Sales Manager in January 2017. Bulakites spent nine years with Genworth and was the National Sales Manager for the life insurance business from 2011 through 2016. Since joining Pacific Life, he has been focused on building the distribution for the independent life brokerage channel.

He’s excited about the opportunity moving forward at a time when there is so much uncertainty in today’s marketplace.

“What’s really unique about this whole thing is you have a company like Pacific Life – with the brand and the financial strength – that says, ‘Hey, we want to come into this marketplace when a lot of other carriers are saying ‘We’re not too sure we want to be in it right now,’ because of all the financial pressures they’re suffering due to the historical low interest rate environment,” Bulakites told Insurance Forums recently.

He noted that Genworth itself departed because of pressures associated with their long-term care business – not because the term market wasn’t a good one. In recent years, several companies have experienced turmoil that has impacted their commitment to distributors and producers in this space. That’s why he says this move by Pacific Life is a unique story.

“Here’s a company that’s come in to the market, and literally provides stabilization to that marketplace. I think there’s a very positive message around that,” Bulakites said. “We have a lot of really strong points in terms of a story to tell, and why producers are going to want to jump on the bandwagon with the Lynchburg operation and where we’re going to grow and expand products for the broader market.”

What’s in it for producers

For producers, the opportunity lies in making selling term life to middle market families profitable, which can be done thanks to the end-to-end technology process Pacific Life purchased from Genworth, with additional enhancements to further streamline processing. Utilizing the technology allows producers to spend less time completing and following up on applications, and more time in front of clients, building relationships. The idea is to help producers reach more families in their community while also creating a viable revenue stream.

To connect producers with the Lynchburg operation, Pacific Life is turning to distributors such as Brokers Alliance, a BGA based out of Fountain Hills, Ariz., for recruiting and building distribution.

“They’re clearly an organization that we wanted to be able to go to market with,” Bulakites said. “Brokers Alliance is literally one of the first national distributors that we reached out to and have formed a relationship with based upon our strong, successful distribution partnerships in the past.”

The previous success was also what brought Brokers Alliance back.

“Our partnership with Pacific Life Lynchburg came out of long-standing relationships we maintain with carriers, and our strong partnership and production with Genworth in preceding years,” said Charles A. Truhlar, CFP, ChFC, LUTCF, Chief Distribution Officer at Brokers Alliance. “We were attracted to the opportunity by the quality of the people involved, and the history and strength of Pacific Life. Seeing that we distributed millions of the old Genworth product, we knew the value this product would bring to the consumer and agent alike.”

Pacific Life, Truhlar noted, boasts one of the most well known brands in terms of consumer awareness in the industry. “Clients know they can count on the company, and the agent now has one of the most price-efficient life insurance policies in the industry, backed by the powerful brand,” Truhlar said.

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