Is Guggenheim Partners the next New York Yankees?Article added by Joe Simonds on September 25, 2012
Joined: January 24, 2011
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The same big spending Dodgers group that is making waves on the baseball field is also making some huge buys on the annuity field. Guggenheim Partners, one of the new owners of the Los Angeles Dodgers, has been on what many across the country would refer to as a "buying spree" of insurance carriers.
Any baseball fan knows that the New York Yankees are one of the most respected while simultaneously one of the most hated teams in the Major Leagues. Much of the hatred comes from competing teams’ fans that will complain about everything from their incredibly high payroll to the fact they just hate the men in pinstripes. Regardless of the reason, as long as the New York Yankees continue to be a dominant franchise, they will most likely be America's most hated team (don't tell someone in N.Y. that though). Of course, the Yankees organization is also considered one of the most successful and historical baseball teams of all time. It isn’t as if this team recently appeared out of thin air. If you look closely at what the Yankees have built more recently, much of it stems from the Steinbrenners’ unrelenting spending on some of the best players in baseball over the last decade and putting them all on one roster. Players such as Derek Jeter, Alex Rodriguez, CC Sabathia, Mark Teixeira and Rafael Soriano, just to name a few, have put the Yankees' payroll close to the $200 million range. Compare that to San Diego, which has a payroll of $55 million this season.
So, you can clearly see why so many "haters" are somewhat jealous of the Yankees, their fat payroll and their continued success year after year.
During this current 2012 season, there have been a number of baseball analysts commenting on the up-and-coming Los Angeles Dodgers team. Earlier this year, the somewhat struggling Dodgers were purchased by Guggenheim Partners and Magic Johnson for a humongous sum of $2.15 billion dollars. This was almost double the record price tag for an American professional sports team. Once the deal was done, the new Dodgers owners began buying up players left and right. In just two months, the Dodgers have acquired a group of big-name stars, including Hanley Ramirez, Shane Victorino, Adrian Gonzalez, Josh Beckett and Carl Crawford. For you non-baseball fans, these are great players.
With the acquisition of those last three players alone, the Dodgers have taken a quarter billion dollars in contracts from the Boston Red Sox, a team intent on a salary purge. According to some baseball analysts, the spending is not completely done and we should
expect more player buyouts in the Dodgers' quest to spend, spend and spend at any cost to win a national championship. Could the Dodgers be the next Yankees?
More importantly, what does any of this have to do with insurance or finance? Well, as it turns out, the same big spending Dodgers group that is making waves on the baseball field is also making some huge buys on the annuity field. Guggenheim Partners, one of the new owners of the Los Angeles Dodgers, has been on what many across the country would refer to as a "buying spree" of insurance carriers.
According to Linda Koco of InsuranceNewsNet, Guggenheim has made the following insurance company purchases since 2009:
It is important to note that during this same period, Guggenheim also revealed their own insurance carrier, Guggenheim Life, which distributes multi-year guarantee annuities with some of the highest interest rates in the industry today. Furthermore, Guggenheim has kept their branded name, Guggenheim Life, completely separate from any of their purchases and so far has decided not to merge or combine any of them together.
- Sept 15, 2009: Guggenheim Life and Annuity Co. becomes the new name of Indianapolis-based Wellmark Community Insurance, according to insurance department records from Oregon. The Guggenheim insurer is backed by Guggenheim Partners, a privately-held financial services firm with headquarters in Chicago and New York.
- Feb 16, 2010: Guggenheim Partners reach an agreement to buy Security Benefit Life.
- Dec 29, 2010: Guggenheim Partners agrees to reinsure the life and annuity business of Standard Life of Indiana.
- Oct 7, 2011: Guggenheim Partners buys Equitrust Life.
- Aug 16, 2012: Guggenheim Partners acquires Industrial Alliance Insurance and Financial Services of Quebec.
- Aug 2012: News of Guggenheim being a potential buyer for Aviva USA, the No. 2 ranked leader for fixed indexed annuities.
Based on all of these large insurance company purchases in such a short period of time, you can begin to see why Guggenheim is not only becoming a major league annuity player, but how it can also be compared to today's New York Yankees in regards to big payrolls and spending. In regards to being America's hated team, there are also some similarities there as well.
Out of the shopping spree listed above, the carrier that Guggenheim Partners has made the biggest splash with is Security Benefit. Seemingly out of nowhere, Security Benefit is now in the top 10 of total FIA sales for 2012, and is on its way to finish the year in the top five. One thing that has made Security Benefit both successful and in some respects hated, is their choice to only allow a handful of FMOs/IMOs to distribute their products.
Guggenheim can be considered wise for only selecting a handful of distribution partners because by having an exclusive annuity product, that FMO will always lead with it versus an independent FMO that leads with a variety of different carriers/products at any given point in the year. However, the same exclusivity is what makes the rest of the FMO field jealous, and in some cases, that jealousy borders on hatred. But at the end of the day, just like the Yankees, you have to do what makes you money and gets you to the top as quickly as possible.
Regardless of what you think about the Yankees or Guggenheim Partners, the fact of the matter is that neither of them seems to be going away or losing momentum anytime soon. And don't expect either owner to stop spending money until they not only win the pennant (or top FIA sales in a quarter) but also take home world champion rings (or become No. 1 in total FIA sales for a calendar year).
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