New Phoenix Cos. Chief Upbeat on Product, Distribution Strategies

The new chief of U.S. life insurer Phoenix Cos. Inc. is optimistic about the company's strategy that includes building new distribution channels and rolling out alternative retirement-income products as a way to resolve some recent financial strength issues.

James D. Wehr, formerly Phoenix's chief investment officer and senior executive vice president, took over as president and chief executive officer April 16, succeeding Dona D. Young, who retired from the Hartford, Conn.-based company after 29 years.

In early March, Phoenix said it was building its future business in ways that will be "less capital intensive and ratings sensitive." Its strategy includes shifting the focus of new business to private labeling, expanding alternative retirement products and development new distribution channels for core products.

Around that time, State Farm Mutual Automobile Insurance Co. told the company that it would suspend sales of its life insurance and variable annuities because of downgrades by rating agencies to Phoenix's life insurance subsidiaries (BestWire, March 4, 2009). Soon after, A.M. Best Co. downgraded the financial strength rating to B++ (Good) from A (Excellent) of Phoenix's core life insurance entities (BestWire, March 10, 2009).

State Farm "was a very important distributor for us but not our sole distributor," Wehr said. Phoenix will continue to distribute life insurance and annuities through existing relationships, but also potential new relationships, he said.

Because of the rating issues, some businesses "are less inclined to do business with us," Wehr said. With State Farm, it was "more about the perception of our brand" based on those ratings, he said.

Wehr takes the helm at Phoenix (NYSE: PNX) during a difficult time for the industry overall. Phoenix reported a 2008 net loss of $726 million.

As CIO, Wehr said already had a challenging assignment as he was in the epicenter of the market meltdown. He joined Phoenix in 1981 and held a series of senior investment-related positions. As CIO, Wehr oversaw the life insurance company's general account and affiliated investment portfolios and directed the public fixed income group.

Phoenix will be a smaller company, as well as "open-minded and considerate of other segments of the market" in addition to the high-net-worth market it previously focused on, Wehr said. The affluent market "was clearly an important part of our distribution focus."

Phoenix is now turning to private label to allow for greater acceptance of its products in the market, he said. Phoenix will be the private label manufacturer and another financial institution would put its brand on Phoenix's product, he explained. The concept is "one that's used effectively in a number of different industries," such as clothing and food, "and we see no reason why it can't be effective in the financial services industry."

He's upbeat about Phoenix's alternative retirement solutions business, including some newly launched products geared to people nearing retirement. One is a stand-alone guaranteed lifetime withdrawal benefit that's applied to non-annuity investments, such as mutual funds, as a new way to generate revenue.

The product "makes lot of sense" as people have become very concerned about outliving their savings, especially over the past few years, Wehr said.

(Listen to the entire interview with Wehr at www.bestdayaudio.com)

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