Q&A with American Life CEOs Michael Salem and Mike Minnich

Published April 1, 2020

American Life (AM Best: B++) is currently offering the most competitive fixed annuity rates on the Blueprint Income platform. While just about every other insurer cut rates in March, American Life actually increased its rates.

American Life is 60 years old, but, under new ownership, the company has refocused on leveraging modern technology to deliver best-in-class products to consumers. Their belief that technology can create more accessible products that are a better value for the consumer closely aligns with our own.

Read on to hear from the CEOs of American Life directly about how they’re building something that is meant to stand apart from the competition.

Tell me about American Life.
American Life is a forward-thinking life and annuity company that uses modern technology and business practices to deliver market-leading products to our customers. American Life has been around for almost 60 years, so it has a solid foundation, but we’ve modernized it with an entirely updated business model and technology. A more efficient business means we’re able to reduce costs to provide best-in-class products and services to our consumers.

What’s your background?
We are financial services entrepreneurs that have spent our careers building businesses in technology, investment, and insurance. We were introduced in 2011 when we were both independently looking at the insurance space. Insurance can be slow and backward, so we saw an opportunity to improve the business model with modern technology and more efficient use of capital. As outsiders to the industry, we aren’t afraid to challenge the status quo and find a better way to do things. It’s well understood that the insurance industry is stuck in the past, and we’re building a company for the future.

What is American Life’s financial strength rating?
A.M. Best rates us B++. Part of our financial strength comes from our flexible business model that lets us quickly respond to the marketplace. Our ability to be dynamic has been a real advantage in the rapidly changing environment we’re experiencing. While many of our competitors are pulling back, we are stepping in, which we couldn’t do without our unique capital model.

 Can you tell me more about how you invest assets in your general account?
Our company does not retain a lot of risk. In our business model, we pass the risk of our policies to reinsurers, which lets us access on-demand capital to meet market needs. The assets that we do retain we invest very conservatively, primarily in broadly diversified investment-grade corporate bonds and corporate credit risk. We also hold collateral, in the form of investment-grade bonds and mortgages, against our reinsurance agreements to further protect our financial standing and safeguard our policyholders.

While our investment approach for our general account is risk-averse and straightforward, the way we leverage reinsurance agreements is one of our key differentiators and allows us to access capital when there’s a market opportunity. This also lets us price products based on the current environment as opposed to what’s happened in the past because we don’t have any legacy exposure. When we look at the market today, we’re looking at it with a forward-looking view.

Can you tell me about the liquidity provisions available in the fixed annuity? How does it work if someone does not withdraw any funds prior to the end of the five-year term?
Right now in the marketplace away from our products, consumers have to make an upfront decision between a higher rate or the peace of mind of withdrawal benefits. We think that’s an unfair position for consumers and a failure of the insurance marketplace, so we decided to offer a policy that gives consumers the ability to decide later. We do this by paying a bonus at the end of the term to policyholders who do not withdraw any funds during their five-year term. Our policyholders can decide if and when they want to choose liquidity over their bonus as their life needs change.

What do you think the impact of COVID-19 will be on your business?
COVID-19 has been devastating in terms of the loss of life, disruption to people’s lives, and the economic uncertainty it has caused. From a business perspective, though, we see it as an opportunity. There’s an expression: “Only when the tide goes out do you discover who’s been swimming naked” and I think some carriers will be exposed by this crisis while others like ourselves will show our differentiation. We both have deep experience from the financial crisis and, knowing it could happen again, built the company to prepare for the unexpected. Our flexible capital model and cloud-based infrastructure give us an edge in times of market distress.

How do technology and innovation differentiate your business?
The industry is saddled with legacy technology. We built a modern technology stack that enables product innovation and a better customer experience. We can respond to a changing market more quickly, taking months instead of years to build new products. So far we have added twists like the liquidity bonus to fairly vanilla-type products, but there’s so much more opportunity. We have some innovations coming down the pipe later this year that will be truly differentiated. This is just the beginning.

You can view the details of the American Life fixed annuity here.

Have a question? Please give us a call or email us at [email protected]. We’d love to help!

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Matt Carey

Matt Carey

Financial Planning Professional

Matt Carey is the co-founder and CEO of Blueprint Income. He believes in the power of technology to make retirement simpler. Matt is a regular contributor to Forbes.com and has been quoted in both the New York Times and Morningstar.

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