As a society, our new normal continues to evolve both personally and professionally. While this is certainly a world none of us ever wished for (or perhaps even imagined possible), it is our reality.

First and foremost, we hope for continued good health for all.

We at Goldstein Financial Group, LLC are available and operating remotely should you have any questions or require assistance. We invite you to call or email as you always have.

M Financial and our industry partner insurance carriers also stand by fully prepared to assist with your life insurance needs.

Lastly, as a member firm of M Financial Group, we received a thoughtful update on the life insurance industry from Wes Thompson, President and CEO of M. For our clients and friends who may have interest, an excerpt of this message follows – I personally found this well written, and thought it beneficial to share.

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A Letter from Wes Thompson

In just a few short weeks, we’ve witnessed a confluence of events that has changed almost every aspect of our lives. Today, we face not only a worldwide health crisis, but also deteriorating economic conditions that have increased the likelihood of a global recession. It’s natural in times like this to question the viability of even the strongest industries. Fortunately, the financial stability and resilience of the U.S. life insurance industry is indisputable.

For over a century, our industry has shown its strength while withstanding the impact of events such as the Spanish flu pandemic of 1918, the Great Depression, World War II, 9/11, and the Great Recession, and it has met our obligations to policyholders even in the worst of times. I have no doubt that we will do the same in the face of COVID-19.

When it comes to periods of financial and economic stress, we have a significant advantage over other industries due to strict regulations designed to maintain insurer solvency and a conservative approach to asset management. Also important is the rating agencies’ continual—and very public—scrutiny of our financial strength and stability. All three factors are worthy of elaboration:

• Increasingly strict state regulations mandate that life insurance companies adhere to conservative statutory and capital reserve requirements. The regulatory authorities require each carrier demonstrates sufficient liquidity to maintain its claims-paying ability under thousands of different economic and financial scenarios, including those involving increased mortality rates, low interest rates, recessions, and extreme market volatility.
• Earlier this year, LIMRA (the life insurance industry’s marketing and research organization) surveyed 28 carriers and found that over 91% were using a pandemic stress scenario and 84% were considering a pandemic’s potential impacts—additional mortality, operational disruptions, and a market downturn.
• Carriers rely on conservative asset management and avoid the use of leverage to protect their ability to pay claims and cover withdrawals, most of which will occur in the distant future. Over 70% of life insurance company assets are invested in bonds (NAIC, 2018). The portfolio is benefiting from its allocation to medium- and long-term debt as the yield curve begins to steepen.
• The life insurance industry is closely monitored by third-party rating agencies that conduct comprehensive analyses to determine the financial strength and stability of every carrier. While ratings like these serve a limited purpose for companies outside our industry, they directly affect carrier operations and are a public signal of insurance quality. M Financial places the vast majority of business with four highly rated and well-respected carrier partners—John Hancock, Nationwide, Pacific Life, and Prudential— each of which has maintained excellent ratings for decades.

 

It’s no coincidence that our carrier partners are among the nation’s largest life insurers. Size is a major factor in solvency. Bigger companies have diversified business lines, display greater transparency, and attract and retain quality management.

The life insurance industry provides affordable, accessible tools for families and small businesses. By making investments for the long term, we support the growth and resiliency of our communities and country. The industry invests $6.3 trillion in the economy, making it one of the nation’s largest sources of investment capital.

Of course, there will be fallout from this pandemic. Every company in the industry is likely to see reduced earnings and experience a strain on capital, and those that are publicly held will experience a share price decline. But I believe the negative impact will be short-lived. History tells us the long-term effect will be negligible and our industry will emerge from this crisis with even greater strength and resiliency.