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Empire Life - Up-close and personal

By Daniela Cambone | November 20 2001 07:26PM

Empire Life has given itself a tough challenge: the best-kept secret in the life insurance industry wants to reach 20% growth a year for the next 3 years... The family-owned company thinks it’s possible by gaining business the old fashioned way, and with a personal touch. A thing of the past in the industry, says its management.

With the implementation of a new executive team, Empire Financial Group is looking to focus on growth and distribution. Les Herr, Vice-President of Individual Sales and Distribution says that one of the first tasks will be to change the perception of Empire’s distribution network.

“A lot of what Empire has had to offer has been hidden. It is a secret. Some of the portfolio we have had for years is not known,” he says. Empire is perceived as a niche player. Its product line, however, includes a complete line of life insurance products, both individual and group, and investments. “We are not going to be a Manulife, but we certainly want to be a large insurance company that is focused on financial planning and who offer a fairly wide range of products,” he explains.

“One of our advantages is our personal approach to do things on a more personal basis. We are saying we want to be one-on-one with our distribution and to bring expertise to the table that they would find of value. That is the only way we build distribution,” says Mr. Herr.

“I come from London Life where I spent 18 years. It gets down to the fact you have to earn business the old-fashioned way, through hard-work, adding value and gaining credibility with advisors,” he adds.

This past May, the Board of Directors of Empire announced the appointment of Douglas Hogeboom as President and CEO of the company and its subsidiary, Concordia Life Insurance Company. He succeeded Christopher McElvaine, who was President and CEO of Empire since 1991.

“There is a new executive team and the two major changes were myself and Steve Pong, Vice-President of Marketing and Business Development. Mr. Hogeboom’s objective of having Steve and myself was to enhance the executive’s team focus on sales and on marketing because it wasn’t strong enough,” explains Mr. Herr.

“Empire has traditionally grown as a result of acquisitions of either companies or blocks of business, whereas over the last couple of years, the focus has shifted to building distribution and building a relationship with the distribution,” Mr. Herr notes.

One-to-One

Empire’s distribution strategy involves focusing on brokers, either dealing with them directly or through a managing general agency (MGA). Presently, Empire has 120 MGA contracts, and deals directly with about 4000 active independent advisors.

What is more advantageous for the broker: to deal direct or through an MGA? Mr. Herr says that it should depend on the broker because the company want to treat all brokers equally.

“I think, and this is a challenge we want to try, we are going to be very neutral. If we have a producer who works directly and wants to work through an MGA, that’s great. We will facilitate that for him. However, if he asks me why it would be advantageous to go through an MGA, that is where I won’t go,” explains Mr. Herr.

While Empire has been focusing on brokers and working with them on a direct basis, Concordia, has been focusing on the MGA channel. The goal says Mr. Herr, is that eventually Empire and Concordia will eventually become one organization under the brand of Empire.

There is still no date for a legal amalgamation of the two, but Mr. Herr says the integration will most probably occur within the next 12 months. “We made available both portfolios, both Empire and Concordia.”

However, what exactly does this personalized approach entail? “Empire has always made available its executive team to get out in front of the advisors,” explains Mr. Herr. “That is one of the areas where as a company we have always been accessible.”

As well, Empire is looking to gain the confidence and trust of advisors, and this often involves admitting mistakes. “We’re not perfect, our goal is to always try to be 90% right…if we’re 10% wrong, we’ll fix it!” he explains. “Let’s not forget this is a personal business, for every mistake there is a lot more good things happening than bad things, even when we make mistakes, they forgive us,” Mr. Herr adds.

Empire also has a direct service line in place, which allows advisors to have access to a 1-800 number. The line, which has been in existence for the past three years, connects to the head office. Mr. Herr explains that whoever answers the phone, is accountable for solving the problem. He recognises however, that it is a service that other insurance companies also have in place.

So why do so many brokers have problems getting answers from companies? “It depends on how you do it. I think the difference is that the people in our direct service unit want to solve problems, they want to help people,” answers Mr. Herr.

After stagnant growth during the last five years, Empire is now seeing an increase in business. Mr. Herr says that Empire will end the year with $17 million in new life and health premiums, which is up 20% from last year. As well, investment product sales jumped by 11% compared to last year.

“We’re happy with the growing business through all of our channels, whether it’s Mom and Dad or business owners. We aren’t always going to win head-to-head with big companies, but we don’t have to,” says Mr. Herr.

Consolidation underway

With the expected continued market consolidation, is it possible Empire will be the next to go on the up-for-sale list? Mr. Herr thinks not. “The key is that we are a public company, but owned by an individual. We are a $5 billion dollar company in assets. My view is that, if you provide good returns, why would they sell? Empire has exceptional financial levels, a good credit rating, great levels of capital and has always had great shareholder returns,“ he adds. “We won’t get as many million dollar cases as we would like, but we are not necessarily going after them.”

Mr. Herr says that Empire’s product line now includes a “true”, Universal Life (UL) product, before it only included the Concept 2000. The new UL product, TRILOGY, is a no-penalty product with three components: life insurance, investment, and critical illness coverage.

Mr. Herr lists Empire’s critical insurance plan, Vital Link and their segregated funds as being some of their best-kept secrets. He explains that Empire’s segregated funds were not really affected by the recent Office of the Superintendent of Financial Institutions regulations since their strategy was not to have aggressive guarantees and resets. On the investment side, Mr. Herr says that Empire’s GIC’s have been stronger than average in the industry.

Empire has also recently added a tax and estate planning, and hired a tax lawyer in Ontario.

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