Nate Gemmiti, CEO of Ibexis Life & Annuity Insurance Co., at the recent NAFA Annuity Leadership Forum discusses the founding of Ibexis and what it takes to create a new brand, launch new products, and become an industry leader.
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Interview Transcript
Paul Feldman:
Hello everyone, this is Paul Feldman, InsuranceNewsNet. I'm here with Nate Gemmeti from Ibexis, and we're going to talk about what is it like to start a new brand in the insurance industry and start creating new products because you created Ibexis. You were involved with the founding of it, and I think it's a fascinating story.
Nate Gemmeti:
Thanks Paul. Well, Ibexis is the, call it rebranding, rebirth of a company that's been around for a long time. So it has its history in a company called Sunset Life Insurance Company, which was formed in the 1930s and most recently was a subsidiary of Kansas City Life. And it was pulled out of Kansas City Life in 2021, fed with new capital, new management team, and new product. And so we're coming at the fixed annuity insurance space and what we think is a differentiated way. Others have bought big blocks of businesses or operating companies as a platform to launch. We thought that the best way to come at the business and be innovative with what we're doing and efficient with regards to operations was start it new. And to be honest, it's a much harder way to get in the business. I can tell you that for sure. But we think if you can do it and we've done it's a better way. So some of the things that we've done have been built really efficient operations, new product, and built that around some phenomenal distribution relationships.
Feldman:
So tell me, in the early days, what was it like when you were just a few people and how you grew that business?
Gemmeti:
Well, the first thing you need to do, I do think this business is a talent game. You need to have good, smart management. The other thing is when you're building a company, you need to have entrepreneurial people. So you have to have expertise, which a lot of people in the insurance industry have. But you also need to have a certain entrepreneurial bend, which not everyone in every sector across all facets of business have. So trying to find that person that has both. We were very lucky to attract excellent talent. Ryan Lex, who ran the IMO channel from Athene-
Feldman:
Ryan's great. I've worked with him.
Gemmeti:
Phenomenal, phenomenal.
Feldman:
Great guy.
Gemmeti:
So that was a big win for us. And he was drawn to what the entire management team was drawn to, being able to build something and bringing all of our collective expertise together and taking a breath and saying, "Okay, we've seen the industry for a long time. We've seen some things we like. We've seen some things we don't like. We see opportunity. How do we want to build this?" So once we hired our chief operating officer who was president of a TPA, our CFO came out of PWC, worked on Allianz, Athene, Ameriprise audits, chief actuary out of Global Atlantic, so a nice team. And then we worked with one of our IMO partners to design operations, design product, take their feedback, and we're really thrilled with what we've put together and how things are going so far.
Feldman:
How long did it take you to get your first product designed and launched?
Gemmeti:
I will say we were having conversations and thought genesis even before-
Feldman:
Of course.
Gemmeti:
... I actually took the role. And I had some ideas about watching what was going on in the industry and how to maybe make some slight changes to products that were out there as a way to offer something a little bit different. But it was about a year and a half to be able to design because you've got to design product, you have to build operations around it, and you need to get distribution on board and get it out the door.
Feldman:
And you got to get it approved by the states.
Gemmeti:
And you got to get it approved by the states.
Feldman:
Yes. Tell me about that process. Is that a difficult process from...
Gemmeti:
Well, I mean, certainly having the compact helps. So you can do one filing for a majority of the states, and our products are a little bit more innovative than some others out there. So there was some dialogue back and forth. But I will say the regulators I thought were fantastic with regards to the questions they asked were appropriate to give them an understanding of what we were trying to do. I think they liked it because ultimately they approved it and there wasn't any tension there. So I think the regulators did their job and I think they did a very good job, to be honest.
Feldman:
So where do you see the opportunity? When you started this company, where did you see the opportunity?
Gemmeti:
Well, I think it's, first of all, the market's obviously on fire. There's a lot of desire in the market for fixed savings products, giving the aging population. I heard recently that the number I heard was only 14% of the U.S. population have actual pensions. So that means 86% of people actually need to save everything that they're going to live off for retirement. And I think it's a fair burden that insurance companies take on to help in individuals really retire with dignity. And that's what I think the industry is trying to help. So where we saw opportunity was providing good products that really serviced a need and trying to offer something a little bit different. And then the other opportunity was building really efficient operations, which we think helps the customer experience, the advisor experience, helps with speed to issue accuracy, and also keeps costs at a reasonable level that we can pass through into good economics to clients and advisors.
Feldman:
So tell me a little bit about Ibexis.
Gemmeti:
Well, I think the thing that we want people to know is that Ibexis is a new brand. The company's been around for a long time. We have an A- rating from AM Best, which is an excellent rating-
Feldman:
Yes.
Gemmeti:
... financial strength, and our outlook is stable. So it's good financial security. And our products, we'd love to have people learn a little bit more about what we're doing because I think our products look very similar to what other folks are doing in some ways. But we have what we refer to as kind of free optionality for clients to be able to utilize if they want. So good base products with some optionality. That's free cost to the client and a little bit different.
Feldman:
So what are some of the free options that make it different?
Gemmeti:
Yeah, so the way that we've thought about the product again is to have a base product that people know and love, and then some increased optionality. On the MIGA side, we've got a traditional MIGA rate for term, but then 50% of the initial premium can be allocated to what we call the plus bucket. And that plus bucket is an additional fixed rate that the client can earn if the S&P goes up a single basis point. So it's like a kicker rate that the client can look at every year. And over that year, if the S&P went up to any degree, you get 100% of this kicker rate. And if it doesn't go up, the S&P stays flat or goes down, you stay exactly where you were. You don't suffer any losses, you just stay at zero for those allocated dollars.
Feldman:
So that is definitely different.
Gemmeti:
It's a little different. And then on the fixed index side, what we've done is a lot of folks are very interested in RILA products, and they're nice products. The issue is, I see twofold. One, it's limited to securities licensed advisors. So it's sold off the back of a prospectus. It's an investment product. The other is the reason why it's an investment product is because it's susceptible to losses, so you can lose premium. And that's fine if someone wants that risk. What we've done with regards to our fixed annuity is at its base, it's a standard accumulation, FIA with good indices and good cap rates, par rates. But the functionality that we've added is that once you have gains, you can expose those gains to losses. And because it's only the gains that are exposed to losses, it's still an insurance product.
So two things happen there. The first is that insurance only licensed advisors can sell it. And the other is what you see when the client's willing to take that risk is that there's significantly upside cap rates and par rates by moving the bookshelf a little wider with regards to the risk. But you can never lose premium and it works the same way that any fixed annuity works every year point to point. And one of the nice things is you can reallocate every year. So maybe it's taking on risk one year, not taking risk the other. And no matter what, it's free optionality for the client.
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