AuguStar sheds Ohio National legacy with ‘all products in all channels’ bid

When Constellation Insurance sought to dive into the annuity market, the insurer first had to address the difficult legacy of Ohio National.

By the time Constellation acquired the troubled insurer in 2022, Ohio National had torched some bridges with producers with its controversial decision to eliminate trailing commissions in 2018. The insurer also ceased selling annuities that year.

Reigniting that business meant rebranding – enter AuguStar – and finding the right person to head up the effort. That person is Clifford Jack, who compiled an enormously successful annuity sales record over 19 years at Jackson National before departing at the end of 2014.

Constellation rolled out AuguStar this week – AuguStar Life Insurance on Tuesday and AuguStar Retirement on Wednesday. Jack is president and CEO of the latter company, charged with building another annuity powerhouse.

He spoke with InsuranceNewsNet today about the challenges in the months ahead. Annuity sellers are living in dynamic times, Jack said, with plenty of "money in motion." Too many insurance companies focus on building products from the "inside out," he said.

"I have always thought that products should be built from the outside in," Jack explained. "And what I mean by that is they should really solve the identifiable problems that your clients, and in our case, those would be advisors and their clients and distributors, are facing. If you can solve the problems that exist with your clients in the marketplace, I think that's a much more sustainable strategy."

Full product line

AuguStar Retirement will market fixed-indexed annuities, multi-year guaranteed annuities, variable annuities and registered index-linked annuities through banks, brokers/dealers, independent marketing organizations and insurance professionals, the insurer said in a news release. In other words, "all products in all channels," Jack said.

Jack declined to get much further into the specifics of AuguStar's product roll out in the coming weeks, other than promising a strategy "a little different than others."

"We want to be an innovative product shop," Jack said. "I think that it's really important to continue to focus on solving the needs of advisors and their clients and through innovation and we intend to focus on that and I think we'll be quite good at that."

Jack will have to find success with different products than the variable annuities he relied on with Jackson. No longer popular with clients, 2022 VA sales were the worst results since 1995, LIMRA reported.

Under Jack's leadership, Jackson soared to the top of the VA sales leaderboard with products such as Elite Access, a variable annuity it debuted in 2012. The product included numerous alternative subaccounts and some “third-party packaged strategies” for asset management, but it had no living benefit guarantee options.

Jack assembled a high-powered lineup of past colleagues and industry veterans on his AuguStar team, led by David Marlow, vice president, operations and IT, and Kimberly Plante, vice president, general counsel. Joining AuguStar Distributors, the newly formed sales and marketing entity with regional hubs in Denver, Colorado, and Nashville, Tennessee, this new leadership team includes:

• Marc Socol, executive vice president and chief revenue officer
• Bill Burrow, senior vice president, strategic relationships
• Elizabeth Griffith, senior vice president, head of distribution services
• Steve Kluever, senior vice president, product and investment management
• Ted Parker, senior vice president, national sales manager
• Dan Starishevsky, senior vice president, head of marketing
• Greg Cicotte, non-executive vice chairman

Bumpy trail for Ohio National

AuguStar has a lot of fence-mending to do with producers who worked with Ohio National in the past. In 2018, the insurer took the unprecedented step of eliminating trail commissions on in-force variable annuity contracts with a guaranteed minimum income benefit rider.

The drastic step came after Ohio National stopped accepting annuity applications. The insurer sold mainly VAs with guarantees that left Ohio National financially vulnerable. About 95% of the insurer's annuity assets were in VAs at the time it stopped selling annuities.

Producers fumed at the decision to eliminate trail commissions and Ohio National was hit with several lawsuits. Meanwhile, the insurer shifted its focus to its life and disability-income insurance products.

"I certainly acknowledge that past practices of the company disrupted certain people in the distribution chain," Jack said, declining further comment "due to ongoing litigation-related issues."

"Most of these issues have been resolved," he added, "and I feel good about where the company is positioned going forward."

Sheryl Moore, CEO of Moore Market Intelligence and Wink, Inc., remains impressed by Jack's work at Jackson National and likes the potential at AuguStar.

"The people that made the decisions to discontinue trail comp at this company are gone," she said. "This new leadership hales from a company that puts agents and consumers front-and-center."

Constellation acquired Ohio National in March 2022, after Ohio National executives cited "challenging" economic conditions in announcing an expansive reorganization plan to demutualize the company.

The deal included the conversion of Ohio National Mutual Holdings and the issuance of all of its newly issued stock to Constellation pursuant to a sponsored demutualization. Constellation, an insurance holding company, is backed by Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan Board.

Anurag Chandra, Constellation Insurance founder, president and CEO, said AuguStar's annuity program is crucial to its long-term strategy.

"The formation of AuguStar Retirement aligns with our enterprise growth strategy to create a market leading annuity business," he said in the release.

Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.