Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Linda Koco
News that American General Life has unveiled an enhanced fixed index annuity brought with it word that the product was developed in partnership with Market Synergy Group, which will be the product’s exclusive distributor.
This means the policy is one of the so-called “proprietary” fixed index annuities (FIAs) that carriers have been developing for sale through a select distribution channels.
The question for annuity professionals is: Who or what is Market Synergy Group (MSG)?
As it turns out, Topeka, Kansas-based MSG is a brand new firm — incorporated in January — that 1) partners with carriers in development of products for exclusive distribution; and 2) partners with select independent marketing organizations (IMOs) in development, distribution and field support of those specialized products.
As such, it could be called a “super-IMO,” although that is not the term the company leaders are using when talking about their firm.
The firm has some deep insurance pedigree. Its co-owners are former executives of Aviva USA (now Athene USA). Other staffers are also former employees of Aviva USA, including two former regional vice presidents who now work in the field for MSG. The MSG distributors are a group of nine well-known and well-established IMOs who sell through independent agents and produce over $8 billion in FIA sales annually.
A few details
Two men co-own the company. The president is Lance Sparks, currently a co-owner of the CreativeOne IMO and formerly senior vice president in the independent annuity business at Aviva USA.
The chairman is Mark Heitz. He retired two years ago as president of sales and distribution for Aviva USA, and was formerly president and chief executive officer of Aviva predecessor companies (American investors Life, and later AmerUs).
Each of the nine IMOs that entered the startup has an equity interest in the business. “We wanted them to have skin in the game,” Sparks said in an interview with InsuranceNewsNet. This arrangement will help incent the IMOs to work toward the “synergetic goals” of streamlining distribution from beginning to end (carrier to consumer), he said.
The nine IMOs are: CreativeOne, Brokers International, DMI, Financial Independence Group, Insurance Agency Marketing Services, Kestler Financial, M&O Marketing, Insurmark and Magellan Financial.
If the company adds IMOs for other projects later on, the new distributors will not have an equity interest, Sparks said.
The product plans
Initially, the young company is focusing on annuities — in particular, fixed index annuities (FIAs) — that are issued by A-rated carriers, Sparks said.
“Thirty percent or more of FIA business is currently going to carriers that are rated B++ or lower,” he said. So MSG’s differentiator is to partner with a strong, top-rated company.
The fact that American General, its carrier partner on the new FIA, has an A rating from A.M. Best is important to the new venture, he indicated. So is the fact that the insurer is a business of American International Group, one of the largest insurance companies in the world.
“We at MSG act as the product development group (between the carrier and the IMOs) and we also provide training and product support for the IMOs and their agents,” Sparks said.
The firm’s first product is the Power Select Plus Income Index Annuity from American General Life. It is designed for clients who are interested in having a higher guaranteed income than available elsewhere.
Whether MSG will partner with other carriers, IMOs or product lines later on will depend on market conditions and consumer and agent preferences, Sparks said. “We wanted to start with a strong company and experienced IMOs, and that’s what we have.”
Will MSG’s newcomer status hamper the firm’s future prospects? “We aren’t trying to build a national brand,” Sparks replied. “We only want it to be a huge brand to just 10 firms — the carrier and the nine IMOs.”
Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda may be reached at firstname.lastname@example.org.
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