15 minute read
The growth of Integrity
Integrity surprises employees with a $125 million payout and equity ownership in the company in this file photo.
Nearly a decade after Integrity Marketing Group acquired its first company, the IMO is now one of the giants of distribution. What is next for CEO Bryan Adams and Integrity?
By John Hilton
Listen to Bryan W. Adams talk for very long and you will hear a story about the Adams Funeral Home in small-town West Texas.
Adams grew up there, immersed in the family business run by his parents, Allan and Gail. The business of death can be unsettling in many ways, particularly when loved ones pass on amid poor financial planning.
Young Bryan Adams saw these heartbreaking scenes and will tell you it led him to a career in retirement planning, and eventually, to start Integrity Marketing Group in 2006.
Adams was just 30 years old at the time.
“I remember coming home every night and my mom and dad would talk about families that didn’t prepare for the inevitable,” Adams said during an October industry conference. “For my dad it was like a ministry almost. He wanted to serve people and pretty much gave away funerals. My mom was the businessperson.”
Adams took a little from both of his parents in turning Integrity into a juggernaut disrupter of traditional insurance distribution. While less is known about private companies such as Integrity, the known numbers put Integrity at or very near the top of the insurance marketing mountain.
The company perfected the new model: use of financial might to build massive scale in order to consolidate and perfect back-office distribution. With a nearrelentless acquisition appetite, Integrity
boasts a network of about 500,000 agents and advisors who serve more than 11 million clients annually.
Integrity’s rocket-ship growth has the industry buzzing. Five years ago, the company acquired Neishloss & Fleming, a Pittsburgh-based company that distributes Medicare Advantage and Medicare supplement insurance plans. Its agent network numbered 120,000 then, according to an Integrity news release.
Integrity is not the only marketing company reaching for scale. Although the companies deny being motivated by competition, Simplicity Group and AmeriLife Group are also growing dramatically via acquisition activity.
The Big Three’s relentless growth is altering the distribution landscape, said Sheryl Moore, president and CEO of Moore Market Intelligence and Wink Inc. Small to midsized IMOs and FMOs are being gobbled up so quickly, it is forcing many to reconsider their plan, she said.
— Bryan Adams, CEO, Integrity Marketing Group
“It is hard to compete against an Integrity, Simplicity or AmeriLife in terms of sales, and therefore annuity commission payouts,” she said. “For this reason, I’ve seen friends talking to these firms when they previously wouldn’t have considered selling so soon. It just seems like for those who had planned to retire in five to seven years, I am seeing more of them entertain discussions with these three firms than I would have anticipated.”
The benefits of scale
Certainly, not all agencies selling out to the super-IMOs are doing so reluctantly. In fact, many are eager to receive interest and offers from the big players. To understand why, one needs to look at what it means to be an Integrity “partner,” as Adams calls them.
In an era of increasing regulatory obligations and segmented marketing audiences, combined with shrinking profit margins, agencies can use the help with back-office functions.
Integrity touts streamlined administrative functions through centralized areas, such as people and culture, technology and innovation, finance, legal and compliance, and “world-class” advertising and marketing. In addition, Integrity offers partners access to proprietary technology through its omnichannel insurtech platform.
“These comprehensive insurance and financial services offerings include valuable agent resources, such as product development, quoting and enrollment systems and customer relationship management software,” Integrity said on its website.
For a smaller agency like Richman Insurance Agency, a Dallas, Texas-based IMO that joined Integrity in August, that kind of backstop can reduce or eliminate a lot of potential headaches.
“This partnership with Integrity is pure opportunity,” said Rob Richman, president of the agency, “to do things you never thought you’d be able to do on your own. And to do it with a big team of resources.”
Adams balks at the perception of Integrity as a voracious acquirer of agencies. He mentions the May 2022 acquisition of Ritter Insurance Marketing, a midsize IMO specializing in Medicare Supplement and Medicare Advantage plans and based in Harrisburg, Pa.
“I’ve never been to [Craig Ritter’s] office,” said Adams, who previously founded Legacy Safeguard, a final expense company. “I’d probably just get in the way. It’s really about how do you come alongside of them, give them more technology, more support, more resources to grow faster and serve more people. So, I think our model is very different than the others, because we’re not trying to acquire business to try to run it.”
Not in the plan
Integrity made its first acquisition in 2013, and to hear Adams tell it, the deal came about almost by accident.
“We never thought about acquiring a business,” he said. “It was never part of our plan. But an insurance company came to us, a really large insurance company, and said, ‘Hey, we’ve got an older distributor that doesn’t have a succession plan. Would you acquire them?’”
That was quickly followed by another, similar offer, Adams recalled, and it quickly became clear that there was a vacuum in the distribution chain that needed to be filled.
The Integrity Marketing Group staff poses for a group photo.
Integrity Partner Map Integrity Marketing Group Acquires Modern Insurance Marketing
Integrity’s aggressive acquisition strategy allowed the company to blanket the United States with distribution.
In 2016, Integrity took a giant step forward with a capital infusion from private equity firm HGGC, the shop co-founded by NFL Hall of Fame quarterback Steve Young. Young now serves as the managing director of Integrity.
The pace of Integrity’s acquisitions quickened in 2022 as the company snared some high-profile targets:
» Ash Brokerage. Acquired in May, Ash Brokerage is one of the largest insurance brokerages in the United States, with more than 400 employees nationwide. In 2021, Ash Brokerage helped to place over $2 billion of premium, while underwriting $25 billion of face amount for American families and businesses.
Based in Indiana, Ash is a full-service brokerage offering life insurance, longterm care, disability, annuities and retirement solutions.
» PHP Agency. PHP, which stands for “People Helping People,” serves nearly half a million Americans nationwide by offering life and annuity products through its team of more than 27,000 agents. Based in Addison, Texas, PHP joined Integrity in July. » Annexus. Integrity sealed one of its biggest deals to date with a late-July acquisition of Annexus Group, a product design and distribution company with $45 billion in combined sales and partnerships with some of the biggest companies in the industry.
In 2022, Annexus expects to place approximately $7 billion in annuity premium and $150 million in target life insurance premium, the company said on its website. Annexus is one of the top annuity innovators in the business and touts itself as “the No. 1 independent retirement planning product design and distribution company in America.”
A public future?
In 2021, Integrity received a second infusion of private equity capital, this time from Silver Lake. A leading technology investor, Silver Lake took a minority stake and a board seat with its $1.2 billion investment.
The Silver Lake investment was earmarked for Integrity technology platforms.
“Insurance and wealth services are crucial components of the health care and financial markets — industries ripe for transformative innovation,” said Egon Durban, co-CEO of Silver Lake.
But the mounting investment from private equity has many in the industry wondering if Integrity is destined to go public at some point.
Integrity became an employee-owned business in 2019 with the formation of the employee ownership plan, and at that time paid out a retroactive cash distribution of $50 million to Integrity’s 750 employees. Adams said there are no plans to shake up the company’s structure.
“I don’t really have a desire to take this company public,” he said. “It’s a business that I founded and remain passionate about in how we serve people better together. So, our goal is to continue to grow and continue to expand. And at this point, we don’t have any desire or need to go public.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.
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Life sales predicted to be flat in 2023
Even though sales were up in total through the first half of 2022, the strong consumer demand for life insurance experienced in 2020 and 2021 began to wane.
By Maureen Shaughnessy
Over the past few years, the life insurance industry has experienced a pandemic, lockdowns, underwriting restrictions, work-fromhome disruptions, life insurance tax law changes and volatile economic conditions.
Life insurance premium sales soared 18% in 2021 as the result of increased consumer demand for life insurance, coupled with the impact of tax law changes allowing higher premiums per dollar of death benefit to qualify as life insurance. Total life insurance premium sales were up 11% through the first half of 2022.
LIMRA foresees this momentum shifting in the years ahead. Even though sales were up in total through the first half of 2022, the strong consumer demand for life insurance experienced in 2020 and 2021 began to wane. We believe sales that occurred as a result of the tax law changes were mainly one-time sales and we expect noticeable corrections in the near future for most product lines, with the exception of term insurance.
Variable universal life and indexed universal life will experience most of these tax-law-change corrections in the second half of 2022 and into the first half of 2023.
Required premiums for whole life insurance generally increased due to the tax law change, and some companies experienced extra sales at the end of 2021 — before the effective date of the price increases. In addition, a second one-time sales correction occurred due to a regulation in Washington state, which prompted a fire sale of long-term care insurance combination products as well as standalone LTCi products in late 2021. throughout 2022.
In general, rising interest rates are not a risk (on their own) to life insurance companies, as long as there is enough time to adjust pricing and product development to match the economic conditions. However, dramatic changes in interest rates — whether up or down — do present risk, as companies do not have time to respond appropriately. If interest rate patterns change abruptly, there are risks to both sales and in-force business, especially to products linked to insurance company general accounts.
Considering all these factors, LIMRA forecasts life insurance sales to be relatively flat in 2022 and 2023, with the risk of sales declines being greater in 2023. If the economic environment improves over time, we anticipate a return to growth in 2024. If our industry can continue to educate consumers about the need for life insurance and enhance the innovative solutions for the underserved markets, it may be possible to improve sales, at least partially, prior to 2024.
Projected Life Sales Annualized Premium Growth
Source: U.S. Individual Life Insurance Forecast, LIMRA, 2022
While premium sales are up in total, policy sales are down 9% through the second quarter, a sign that consumer demand is waning. Term premiums have decreased in the past three quarters, and whole life is up only slightly year to date. Term and whole life are key products for middle-income consumers.
During this time period, inflation persisted for much longer, and at a higher rate than many expected. Inflation has a negative impact on sales to middle-market consumers, and that impact is seen most likely in term and whole life products.
Through November 2022, the Federal Reserve raised the federal funds rate for four consecutive months, each time raising its benchmark interest rate 75 basis points. The Fed took an aggressive stance against inflation, at the risk of slowing the economy into a recession.
The aggressive short-term interest rate increases ripple through to longer-term interest rates as well, including the 10year U.S. Treasury rate. The 10-year U.S. Treasury is a benchmark for many life insurance companies both for what the company can receive in return for its own asset portfolio and as an indication of the return it can use in the pricing of its life insurance products. The 10-year Treasury has risen quite dramatically
Maureen Shaughnessy is senior actuary, experience studies, LIMRA and LOMA. She may be contacted at maureen.shaughnessy@innfeedback.com.
Serve your clients’ best interests on both Main St. and Capitol Hill
As custodians of our clients’ financial well-being, advocacy should be a service we provide.
By Bryon Holz
Unlike in Vegas, what happens in D.C. doesn’t stay in D.C. In fact, the actions of Congress can have profound impacts on insurance and financial professionals around the country as well as on the families and businesses that are our clients.
Taxes, retirement planning, longterm care, college savings, health care, property/casualty insurance, annuities, you name it — whatever products and services we provide and wherever we practice, legislation shapes the financial landscape for our clients. It determines how and whether we are able to guide them to financial security and help them achieve their life goals.
I believe being politically active and involved is as important to serving my clients’ best interests as is recommending the right coverages or financial plans. It’s clear that laws and regulations can work for or against Main Street Americans’ best financial interests. As the custodians of their financial well-being, advocacy on their behalf should be another of the services we provide.
Our elected officials, I honestly believe, want to do what is best for their constituents, but laws and regulations are complex and can have either misguided or unintended consequences. As experienced professionals in our industry with the guidance of advocacy organizations such as NAIFA, we understand better than our clients — and often better than the legislators themselves — how government policies promote or hinder financial security. It’s important for us to share our understanding and advocate on our clients’ behalf.
This month, the 118th Congress of the United States convenes in Washington. Numerous freshman lawmakers who have very little understanding of our industry and how it benefits people’s lives will be taking the congressional oath of office for the first time. The same scenario is playing out in state legislatures across the country. Insurance and financial professionals are perfectly positioned to bring these novice lawmakers up to speed. But even lawmakers who have been in their roles for years or even decades benefit from hearing our message. They can never learn too much or care too much about Americans’ financial security.
I recently returned from Washington and NAIFA’s National Leadership Conference, where I went to Capitol Hill with many of my professional colleagues. I had a very productive meeting with Rep. Scott Franklin from my home state of Florida. This was not my first rodeo. I have been a grassroots advocate at the federal and state levels for years. I know from that experience that our elected officials want to hear from us. They value our input. They want us to share our knowledge of how their actions affect our clients and how they can help.
Once again, our government at the federal level is nearly evenly split between the two political parties. And while they have their obvious differences, there is one thing they have in common. They want to serve, and they need the support of their diverse constituencies in their home districts and on Main Streets across the country.
These are the same people we as financial professionals serve, the Main Street families and businesses that drive our economy and strengthen our nation. We may or may not agree with our lawmakers. We may or may not have voted for them. But I have learned from my experience as a political advocate and from participating in NAIFA’s nonpartisan advocacy events that I can effectively serve as a resource for and be influential with lawmakers from both sides of the aisle.
When we’re discussing the issues that impact our industry and our clients with members of Congress, state legislators or their staffs, it doesn’t matter if we are Democrats, Republicans or Independents. Our issues are people issues. In our advocacy as well as in our practices, we serve our clients’ best interests. We are all members of the Financial Security Party.
As we contemplate how we can be better professionals and better serve our clients in the new year, I would urge every financial professional to consider the importance of political advocacy. Connect with your lawmakers when they are in your home district, or take advantage of opportunities to visit with them in Washington. NAIFA’s annual Congressional Conference is May 22-23. More than 500 agents and advisors will come together from across the country to meet in small groups with their lawmakers. It’s a great way to get involved.
You can make a difference. As professionals serving your clients and communities, it is in their best interests that you do so.
Bryon Holz, CLU, ChFC, LUTCF, CASL, LACP, is the 2023 president of the National Association of Insurance and Financial Advisors. He founded Bryon Holz & Associates in Brandon, Fla., in 1983 and has been a NAIFA member since 1987. He may be contacted at bryon.holz@ innfeedback.com.
