by Structured Settlement Watchdog
Why do some twits continue to mischaracterize structured settlements funded with Symetra Life Insurance Company annuities, as being provided by a "Berkshire Hathaway entity"?
The obvious answer (as I pointed out in November 2009) was to increase confidence over Symetra's ratings by shamelessly attempting to insinuate the imprimatur of Warren Buffett. I mean nobody appears to making an equally shameless and inaccurate statement that "it is being provided by a "White Mountains Insurance Group Ltd entity"
Consider the following:
Link to subsidiaries of Berkshire Hathaway, Inc. Note there no link to Symetra
Link to subsidiaries of White Mountains Insurance Group, Ltd. Note that there is no link to Symetra
Link to the Board of Directors of White Mountains Insurance Group, Ltd. Note that neither Warren Buffett, nor any other officer of Berkshire Hathaway is listed on the Board of Directors.
Link to Symetra Board of Directors. Note that neither Warren Buffett, nor any officer of Berkshire Hathaway, Inc is listed on the Board of Directors. However, two White Mountains executives serve on the Symetra Board.
On January 20, 2010 the Associated Press' Tali Arbel reported that Berkshire Hathaway and White Mountains each own 26.3% of Symetra Financial Corp. Arbel reported that "Symetra, which was originally slated to go public in November 2007 with a $750.5 million IPO, canceled the offering due to market turmoil just prior to the recession's start. At the time, major shareholders White Mountains Insurance Group Ltd. (NYSE:WTM) , and Buffett's Berkshire Hathaway had both planned to sell their entire stakes".
While Arbel notes that the two investors later decided to keep their shares, the idea that the two investors were seeking to dump their entire block of shares shows the potentially fleeting nature of an investment.
The bottom line is that there is no need for insurance agents to lie. Anyone who uses a statement that is grossly misleading to induce someone to agree to a structured settlement needs to get their ass kicked around the block a few times.
On the positive side of things Symetra reports improving numbers for the segment in its Q1 2010 results. The following is an excerpt from a statement released by the company on April 28, 2010.
The Income Annuities segment, which includes single premium immediate annuities (SPIAs) and structured settlements, reported pretax adjusted operating income of $6.4 million in first quarter 2010, compared with $14.4 million in the same quarter a year ago. Mortality losses in first quarter 2010 were $0.1 million, compared with higher-than-normal mortality gains of $4.3 million in first quarter 2009. A lower interest spread from reduced investment yields also contributed to the decline in adjusted operating income.
Sales for the quarter totaled $66.3 million, a 64% increase over sales of $40.4 million in first quarter 2009. Income annuity products continued to gain favor with consumers seeking a low-risk investment vehicle that provides income for life. Sales of structured settlement annuities also accounted for growth in this segment". Full report here