Altig Orlovic Agencies with American Income Life

Phil’s Memo 6/12/12

Success comes one step at a time.

                   –John Nordstrom, founder of Nordstrom                                       

Heavy news day. First of all, A.M. Best Company came out with their annual ratings today. A.M. Best is the oldest and most authoritative insurance rating source in the world.They’ve been doing this since 1899 and are THE independent grading service people look to when they need the skinny on how strong an insurance company is. Remember, people can only collect on their policies if there is money there to collect. Can major, international life insurance companies go broke? Absolutely. Doesn’t matter how big you are, it’s how strong you are. If you’re big and have a portfolio of questionable investments, you can go down in a hurry.  Remember Lehman Brothers and Countrywide mortgage? Even General Motors would have gone down a couple years ago without a government bailout.   It’s not size, it’s strength. This stuff is important.

They give each insurance company an FSR, or Financial Strength Rating. From A+ and A++ (Superior), to A and A- (Excellent), B++ and B+ is Good. B and B- is fair. C++ and C+ is marginal, C and C- is weak. And poor from there on down. Usually, most companies are in the A’s and B’s. During the Great Recession, you saw a lot of them drop into the lower B’s and upper C’s, depending on their portfolio. They are recovering as the economy starts to recover.    Torchmark is rated an A+ Superior again for 2012. The Rating System praised the diversity of Torchmark’s earnings diversification and consistent results.

As of March, their stock portfolio had increased $900 million in value, that hasn’t been realized yet. That’s technical language meaning they are holding a lot of stocks that have gone up in value but they are holding instead of selling. Their main concern with Torchmark is that two of their subsidiaries (Liberty National and United American Insurance companies) have not seen the agent growth they would like to see.  And then they immediately point out that American Income Life has seen excellent agent growth, from both recruiting and retention. You can read all the details at But for you it means you can go out with pride and confidence that your clients are well-protected, and that the future for the client, the agent and the manager are rock solid.

Next bit of news is not as rosy. It was published in the Washington Post today, but I noticed USA Today has the same data in their front page story. The headline read, “Recession wiped out 20 years of wealth you built, Fed says.” The Federal Reserve System said the median net worth of families plunged 39 percent these past three years. Currently, the average American has a Net Worth of $77,300. Or about a year or two of Net Worth built up by most Altig MGA’s or RGA’s at standard.

The article goes on to say, “Over a three year span, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most.  Home ownership, once heralded as a pathway to wealth, became an albatross. If the recession set Americans back 20 years, economists say, the road forward is sure to be a long one.  Americans have tried to rebalance the family budget but have found it difficult to reverse the damage. Median income fell and retirement accounts declined.” The article finished using words like suffered, implosion, downward, reverse wealth, shrunk, moribund.

I think we sometime forget what is going on around us and are almost numb to it. We are certainly insulated from most of it. RGA’s and MGA’s have taken advantage of the situation by hiring a higher quality agent and manager, offering them a career and opportunity that seems to float above the struggling economy. Renewals continue to build (about 99% of them never saw a dip) and PVFC, that is the commissions that will pay on policies currently being sold, continues to climb higher. If your income or wealth did not go up this year, sit down with your manager to put a plan together and make it happen.  Don’t wait for an external market turn-around, create your own economy.

We’ve looking at “Yes” companies. So far, we’ve explored Costco and Starbucks. Today, another large company that has established legendary and broad achievement in getting to “yes”. They all do it a little differently. We need to look what they are doing and see how it applied to our business and what we can learn. Not everything is transferable.

Let me start off with a principle: The larger the entity, the slower and more difficult it is to turn. In college, I took Sailing for my PE requirement (going to school in Seattle does have its benefits). And we started on little 14 foot dinghy’s. We could whip those around on a dime. Literally. I could be going one direction, and in 1 second, swing the boom, turn the rudder and we’d be going a totally different direction. As we got to bigger boats, this would take a little longer. If you’re talking about an oil tanker, it might take several minutes to change bearings.

So it is with an organization. If you have 3 people in your agency, you can change a lot in a week. If you’ve got a couple states and 25 people, it may require a month or two. The organizations we’re looking at are Fortune 500 Companies. The biggest companies in the nation. Nordstrom is no exception. So if they can pull it off, we certainly can. How does Nordstrom get people to “Yes”? They empower their people. For decades, new employees received a copy of the Nordstrom Employee Handbook. It was one page. Actually, it was a half a page; and contained 75 words.

Here’s what it said:

Welcome to Nordstrom. We’re glad to have you with our company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great belief in your ability to achieve them.

Nordstrom Rules: Rule #1. Use the best judgment in all situations. There will be no additional rules.

Please feel free to ask your department manager, store manager or division general manager any questions at any time.

They are on Fortune Magazines “100 Best Companies to work for” in 2012. Again. In fact, they have been on the list so many years in a row; Fortune magazine finally just inducted them into their Hall of Fame, for the Best Companies to work for. Wow. How can you pull that off in a company with over 50,000 employees? We’ll look at that next week.

Washington State is flying high. $36,967 in New Agent production. How are they doing it? They are building a generation of leaders. Intentional in both their selection and development. Guess what?  In 12 months, they will be running the state. Or other states.

Right on their heels: BC. $35,061. 29% closing ratio, $947 per sale for their agents that are in their first six months. Great numbers. Their new growth is strong. Over $2,200 per agent and 30% closing across the board for that province. Burnaby has over $40,000 in ALP coming out of that office alone.

Hawaii. $32,915. They do $940 in ALP per Sale for their new people. Excellent. Diamond Head is on a roooole. $1,200 PER sale. $21,678 to lead the state. Wailuku, $18,986. Office close ratio of over 56%.

Virginia. $28,522. $63,600 in Total ALP. All four of their offices top $10,000, led by Virginia Beach’s $21,435. Roanoke and Manassas run $2,300 to $2,500 per agent, so they’re good.

California. $24,052. California is over $60K total as well. Every office in that state cranks out at least $10,000 a week. LA leads them with $29,000.

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This entry was posted on June 14, 2012 by in Phil Folkertsma.
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