Chillin' out till it needs to be funded
The New York Life Insurance Company, 9th till last year, jumped to No. 2 in market share behind Metlife with a near 6% market share in Life taking a leaf out of the book of the World’s best. AIG dropped just 4 places in the whole melee of the stimulus and this continuing depression. New York Life simply ‘educated’ prospects about how it was properly capitalised and fully ready in case of any further financial breakdown, bringing it a whole lot of new business ( see story: Slump spurs grab for Markets)
NY Life always had a vibrant sales force and with its diligent processes and adequate attention to current relationships, it has also managed to keep its existing customers happy, increased its share in market friendly Variable Life plans and kept its leadership in Whole Life plans for more than a decade. There is definitely one underlining factor that believers in the risk driven markets model do not realise. The underlying fact in winning is sanity in leadership and focus on the good pieces of business. It is not about Richard Branson and other half baked half thinking brazen tomfoolery like at BofA after the purchase of Merill ( there are some Indian examples that you can also read at http://zyaada.info Or http://india.advantages.us ) or the GOP reaction to Obama’s healthcare plans. ( And how is Obama’s plan going to make insurance cheaper? It does not seem to be the issue at all!!)
New York Life also lost $3.5 billion on its investment portfolio like the other big banks and AIG but Metlife having taken all of the business headed for AIG ended up with a sky rocketing 12% market share and NY Life managed to increase market share by a further 180 basis points. True, NY Life is but a can of soup for those hit by the recession opportunity..because there are other ways to beat the old leaders in the recession.
One of these popular ways this time has been to give jobs to out of work investment bankers from Goldman Sachs, Lehman and others at Deutsche Bank and some boutiques, that were not owned by these ex bankers. However, Deutsche Bank has already been caught in trying to beat the losers of the recession, continually facing funds shortages in the market and hungry for Capital after market adjustments caught up with its losses.
Yet it is relatively easier, and thus there is an opportunity during a bad recession to catch up with the falling Joneses and come up ahead in the race. It visibly happens in retail in the Coke vs Pepsi and the P&G vs others wars (Unilever in Asia and Europe) or in GM vs Ford, but is equally vehement in markets in banking and insurance. Competition is the life blood of the economy and without such acts it is very difficult to beat any recession.
On a relatively obscure note, that is also why banks running away from Asia are unlikely to survive in the coming decade, as the growth and the money here ensure that the growth is sustainable, and Life and P&C entrants in this market would also do well to learn more regulatory control from the economies in Asia that remained capitalized and capable despite investments sinking..but then that is another article altogether.