Phoenix Says Secondary Market, STOLI are Impacting Its Business
Posted March 10, 2010 5:50PM PST

Phoenix Cos. said in its annual report for 2009 that it has been selling more policies to older people, and issuing stranger-originated life insurance despite attempts not to do so.

The carrier, which saw its financial strength rating downgraded in January by A.M. Best, also said that the life settlement market is behind the purchase of policies.

"The evolution of the financial needs of policyholders and the emergence of a secondary market for life insurance and increased availability of premium financing suggest that the reasons for purchasing our products are changing," Phoenix said in its year-end filing with the Securities and Exchange Commission.

The company said it doesn't know what impact STOLI will have on the firm's bottom line.

"While we instituted certain controls and procedures to screen applicants, we believe that our sales of universal life products includes sales of policies to third party investors who, at the time of policy origination, had no insurable interest in the insured," Phoenix said. "The effect that these changes may have on our actual experience and profitability will emerge over time."

Source: SEC Filing


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