Baltimore Life: Company Will Continue ‘Knocking on Doors’ Others Aren’t

Baltimore Life Insurance Co. will continue "knocking on doors that other companies aren't knocking on" as it seeks to diversify from the senior-focused final expense business to the more profitable wealth-transfer business, the new president of the company said.

The 127-year-old company, licensed to do business in 49 states and the District of Columbia, focuses on providing financial security products to middle-income people living in rural markets across the United States. "We've been focused on that for a long, long time -- a rich history," said Dave Ficca, who was named president of Baltimore Life last month. He took over the job from Chairman and Chief Executive Officer L. John Pearson, who will remain in that post.

Many bigger life insurers remain focused on the wealthy, but Baltimore Life's career and independent agents are focusing on people "who are pretty much ignored by the larger companies," Ficca said. The company targets families and individuals with incomes of $25,000 to $35,000 at the low end up to $75,000 to $100,000 at the higher end.

Ficca joined Baltimore Life in 2002 as chief financial officer and senior vice president. He brought more than 17 years of experience in public accounting, with more than 13 of them in the insurance industry. As president, Ficca said he's focused on executing Baltimore Life's existing strategy, which is to become more profitable over time.

Among its strategies is entering new markets to diversify. Baltimore Life sells traditional financial protection products, including whole, term and universal life, as well as "final expense" policies, he said. Final expense, a simplified issue, whole life policy, is currently the company's top-selling product, comprising 48% of its business. Its targeted to seniors interested in setting aside money for their family to help pay for funeral, burial and other expenses after they die, Ficca said.

Some of Baltimore Life's competitors in this market have gone away, he said, such as Shenandoah Life, which was taken over by Virginia regulators in February after suffering investment losses tied to the credit crisis (BestWire, Feb. 13, 2009).

Final expense is a big part of Baltimore Life's total premium because the company's independent agents are focused on it, Ficca said. However, "we wouldn't want ourselves to look like a 50% final expense company 10 years from now," he said. The target is to reduce this business to about 25% of Baltimore Life's total business over the next three years, he said.

The company is starting to diversify into the wealth-transfer market, with a single-premium whole life product, and sales are doing very well, Ficca said. "As we've moved up the rating chain, we look to get more involved in the wealth transfer market," he said. Baltimore Life currently has a Best's Financial Strength Rating of B++ (Good).

Another strategy includes being the "carrier of choice" for captive and independent agents across the United States, he said. Baltimore Life "is not likely to be the lowest-priced product on the block or are we likely to be the highest comp," he said. However, "if we are going to grow the business, it's going to be because people want to do business with us because of our service model."

Meanwhile, Ficca assumed the president's post at a tumultuous time for the U.S. life insurance industry. How has the company fared financially through the financial crisis? It wasn't immune from investment losses that other companies experienced, he said. Year-end 2008 net income dropped significantly to $1.1 million from $8.5 million the same period a year ago, and included net realized investment losses on some bond positions, he said, but noted Baltimore Life was able to remain profitable.

Baltimore Life is structured as a mutual insurance holding company, essentially a hybrid between a mutual life insurer and a publicly traded one. That formation provides some flexibility for mergers or acquisitions that Baltimore Life is eyeing down the road, but it "really hasn't been significant to us over the last few years in particular," Ficca said. The company has no plans to go public, he said.

[To listen to an interview with Ficca, go to www.bestdayaudio.com]

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])