CHICAGO — One year after Lincoln National Corp. finalized its merger with Jefferson-Pilot, the company is sharpening its focus on serving the 90 million U.S. consumers who are expected to reach retirement in the next decade.
In an interview Wednesday, Dennis Glass, Lincoln National's president and chief operating officer, and formerly the chief executive of Jefferson-Pilot, said the merged company spent its first year studying each company's product mix "to come out with a combined portfolio that not only takes the best of the products being offered by the two companies prior to the merger, but also upgrades and tweaks products so they represent the best value in the marketplace."
The customers Lincoln National is aiming for are Baby Boomers, which Lincoln National numbers at 80 million, who will retire over the next 10 years or so.
Insurers have been competing to roll out annuity and other products that match the retirement plans of this group, which Glass said represented the largest demographic event in U.S. history.
Lincoln National has had some success with Boomer-targeted product innovations, including MoneyGuard, which combines life insurance with long-term care insurance, and i4Life, a variable annuity enhancement that gives account holders some flexibility in taking an income stream from their investment. Both have become popular features in the market, offered in some form by a variety of annuity sellers.
Glass said such products help put insurers in the mix alongside other retirement planners when Boomers look for help with retirement planning. Products like i4Life, which promises Boomers that they won't outlive their retirement income, is an enhancement only insurers have the know-how to offer, Glass said. "That is a distinct advantage we have in the marketplace, complementing the mutual fund business," he said. "Consumers can transfer their longevity risk to the insurance industry."
He said the promise of knowing income will last a lifetime is a facet of Lincoln's product portfolio.
Lincoln National competes against a slew of brand name retirement-oriented insurers and mutual fund companies, including MetLife Inc. (MET), Prudential Financial (PRU), and Hartford Financial Group (HIG).
But in a March note, Merrill Lynch analyst Edward A. Spehar said he sees Lincoln National continuing to gain market share in variable annuities as "a function of living benefits features and reinvigorated wholesaling effort." Merrill Lynch managed a public offering of securities for Lincoln National in the last year and acts as a market maker for the company.
The $7.5 billion merger, first announced in October 2005, combined Lincoln's life insurance and variable annuity business with Jefferson-Pilot's universal life and fixed annuities in a merger of equals that contained little overlap in products or distribution.
Earlier this week, the company said it will launch what it calls its Unified Product Portfolio beginning over the next few months, which will target Baby Boomers in all stages of their retirement planning, from those who are 10 or more years from retirement, to those who have already retired.
Glass said the launch, which will blend products from both companies into a customer-friendly package, is a thoughtful way of positioning itself against the competition.
The program will be marketed both to Boomers and to the financial advisors that act as distributors for the insurer.
"It is a combination of leaving two portfolios alone for 12 months, taking time to study markets and characteristics of the products, and shifting consumer demand to come to market with a new portfolio that is as up to date as any portfolio in the industry in terms of features and price."
