Re: Re: Re: Re: nml in trouble

: : 8.8% is a dividend crediting rate it is not INTEREST. All life insurance companies have a proprietary formula they use in computing dividends. Dividends are to life insurance what special sauce is to hamburgers -- it's 1000 island dressing and katsuo and mayo in differeing amounts -- taste similar but it's not the same. In a life insurance policy dividends are comprised of net return on equity in the general account of the company ( responsible company will target a 6% to 7% ROE as that is conservative and SAFE and easily maintained by investing in bonds and real estate and private placements ), the other two factors are mortality savings ( how many people didnt die versus the amount we said would -- life insurance companies OVERESTIMATE mortality in whole life so they can GUARANTEE the CV and the DB -- the excess goes to reserves then policyholders ), and the last component of the dividend is savings from the operations of the company -- ie more streamlined and cost effective operations. All life insurance companies compute this differently -- it is their competitive advantage. Lastly dividends are a function of total face amount in force -- proportionately the more death benefit a company has in force the greater the dividends. Prudential is the larget life insurance companny in America -- they distributed $20,000,000,000 in dividends last year. They have the largest block of business. NML is growing their book -- no question but they no longer submit their historicals to AM Best one can only conclude that their costs of doing business, their mortality margins, and or their net ROE are getting worse -- not bad -- but not what they have historically been able to do.

: : You cannot show on an illustration a long term 8% ROR to a client -- because it might not happen, and it is misleading. It might be better -- it might not.
:

Follow Ups:

Post a Followup

Name:
E-Mail:

Subject: Re: Re: Re: Re: Re: nml in trouble

Comments:
: : : 8.8% is a dividend crediting rate it is not INTEREST. All life insurance companies have a proprietary formula they use in computing dividends. Dividends are to life insurance what special sauce is to hamburgers -- it's 1000 island dressing and katsuo and mayo in differeing amounts -- taste similar but it's not the same. In a life insurance policy dividends are comprised of net return on equity in the general account of the company ( responsible company will target a 6% to 7% ROE as that is conservative and SAFE and easily maintained by investing in bonds and real estate and private placements ), the other two factors are mortality savings ( how many people didnt die versus the amount we said would -- life insurance companies OVERESTIMATE mortality in whole life so they can GUARANTEE the CV and the DB -- the excess goes to reserves then policyholders ), and the last component of the dividend is savings from the operations of the company -- ie more streamlined and cost effective operations. All life insurance companies compute this differently -- it is their competitive advantage. Lastly dividends are a function of total face amount in force -- proportionately the more death benefit a company has in force the greater the dividends. Prudential is the larget life insurance companny in America -- they distributed $20,000,000,000 in dividends last year. They have the largest block of business. NML is growing their book -- no question but they no longer submit their historicals to AM Best one can only conclude that their costs of doing business, their mortality margins, and or their net ROE are getting worse -- not bad -- but not what they have historically been able to do. : : : You cannot show on an illustration a long term 8% ROR to a client -- because it might not happen, and it is misleading. It might be better -- it might not. : : <div align

Optional Link URL:
Link Title:
Optional Image URL:

Please enter the characters in the image above.