New York Life Insurance Company

New York Life Insurance Company
Mutual
Industry Insurance: Life & Annuity
Founded 1845
Headquarters New York Life Building
New York City, New York, U.S.
Key people
 Ted Mathas, CEO and Chairman
Revenue Increase$27.29 Billion[1] USD (2014)
Increase$2.024 Billion[1] USD (2014)
Number of employees
 12,000 (2014)
Website www.newyorklife.com

New York Life Insurance Company (NYLIC) is the largest mutual life-insurance company in the United States, and one of the largest life insurers in the world, ranking #61 on the 2016 Fortune 500 list,[2] with about $550 billion in total assets under management, and more than $21 billion in surplus and AVR.[3] In 2007, NYLIC achieved the best possible ratings by the four independent rating companies (Standard & Poor's, AM Best, Moody's and Fitch). Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

History

New York Life Building

The company was founded in 1845 as the Nautilus Insurance Company in New York City, with assets of $17,000. It was renamed the New York Life Insurance Company in 1849. Its first headquarters were at 58 Wall Street from 1845 until 1846 at which time they were moved to 29 Wall Street. Subsequent addresses included 68 Wall Street, 106 Broadway, and 112-114 Broadway. The first president was James DePeyster Ogden, who served from 1845 until 1847. The current New York Life headquarters was designed by architect Cass Gilbert and completed in 1928. The New York Life Building, at 51 Madison Avenue, was constructed during the presidency of Darwin P. Kingsley. As with other early insurance companies in the U.S., in its early years (1846–1848), at the behest of its Southern agents, the company insured the lives of slaves for their owners. These policies were discontinued at the direction of the Trustees on April 19, 1848. The total claims paid on slaves' lives totaled $1,050. Nautilus sold 485 slaveholder life insurance policies during a two-year period in the 1840s. Their trustees voted to end the sale of such policies 15 years before the Emancipation Proclamation.[4]

In 1860, before state laws required it, New York Life developed the non-forfeiture option, the predecessor to the guaranteed cash values of modern policies, under which a policy remains in force even if a premium payment is missed. It was also the first American life insurance company to pay a cash dividend to policyholders, and the first U.S. company to issue policies to women at the same rates as men. Susan B. Anthony was one of their first female policy holders, and her father worked for NYLIC.[5] In 1896, New York Life became the first company to insure people with disabilities and the first to issue a policy with a disability benefit that presumes total disability to be permanent after a predetermined period.

In the late 1990s, New York Life was one of several large mutual life insurers to back a New York State bill that would permit the formation of a mutual holding company (MHC), a corporate structure that could preserve mutuality for policyholders, while providing a company access to capital markets without the full demutualization of the organization. CEO Sy Sternberg himself argued strongly in favor of the bill,[6] which was ultimately defeated. The NYLIC board of directors subsequently reaffirmed its commitment to remaining a mutual, and the company strongly and publicly embraced this decision through a series of advertisements.

Financial crisis of early 21st Century

According to their Report to Policyholders 2007, in early 2007 the company's managers became concerned about the state of credit markets, so in February 2007 "based on our belief that the markets were acting irrationally" New York Life decided to move much of its cash flow into safer investments such as US Treasury bonds. "By August 2007, the credit market problems we had feared were front page news," the Report notes.

In November 2008, the company announced it would not participate in the Troubled Asset Relief Program. "The company can meet all of its strategic objectives without government capital, its businesses are strong and profitable, and it is committed to remaining a mutual company operating for the sole benefit of its policyholders," states a company press release.[7]

Theodore "Ted" Mathas, president and CEO in 2008, said at the time of the financial crisis that New York Life is "built for times like these." This phrase became the title for the 2008 report to policyholders. Ted Mathas becomes the company chairman on June 1, 2009.[8]

New York Life maintains "superior" financial ratings from A.M. Best, Fitch, Moody's and Standard and Poor's, all of which have reaffirmed the ratings during the financial crisis of autumn 2008.[9]

Criticism and Controversy

New York Life has been the object of much skepticism and scrutiny over allegedly unethical sales practices and refusal to remit death benefits, notably in the State of California.[10][11] NYL settled an investigation over negligent business practices in California for $15 million. A similar controversy came to light in 2008 with criminal proceedings in the State of New Jersey.[12] A major class-action lawsuit was filed in 2013 in Indiana, where plaintiffs claimed that employees of the New York Life Insurance Company routinely engaged in Securities fraud, Life insurance fraud and other violations of Indiana State Securities laws.[13]

There have also been numerous complaints issued by employees of New York Life, for encouraging Multi-level marketing practices, including lack of base pay, use of high pressure sales tactics, and encouragement on the parts of management to target employees' family members and vulnerable members of employees' communities for sales marks.[14]

Business scope

Both NYL (and its primary American insurance subsidiary, New York Life Insurance and Annuity Corporation) are licensed to do business in all 50 states and the District of Columbia.[15][16] The company also sells annuities and long-term care insurance; mutual funds through its subsidiary NYLIFE Securities, a registered broker-dealer; and provides institutional asset-management and retirement-plan services from subsidiary New York Life Investment Management (NYLIM).[17][18]

On Nov. 18, 2015, New York Life’s Board of Directors voted to approve a total dividend payout to participating policyholders of $1.7 billion, the highest level in the company’s 170-year history. This represents a $83-million (5.2%) increase over the 2015 level and a 37% increase since 2012. And it marks the 162nd consecutive year in which they have exceeded guarantees by paying dividends on eligible participating policies.

New York Life has dominated the Million Dollar Round Table (MDRT) in the United States for the 61st consecutive year, with 2,464 members in 2015. MDRT granted membership to only 9,966 agents in the entire United States, making membership in this organization a distinguishing life insurance career milestone for those demonstrating superior professional knowledge, experience and client service.

NY Life Building, Kansas City.

International Operations

Operation in Mexico.[19]

New York Life Insurance buildings

The New York Life Insurance Company has commissioned a number of buildings under the name "New York Life Insurance Building."

  1. 1 2 Bloomberg.com. "New York Life Insurance Company Announces Earnings Results for the Year Ended December 31.2014 - Bloomberg Business". Bloomberg. Retrieved April 14, 2015.
  2. ↑ "New York Life Insurance Financials and News - Fortune 500". Fortune. Retrieved June 10, 2015.
  3. ↑ "New York Life 2012 Annual Report" (PDF). New York Life Insurance Company. Retrieved 2013-07-30.
  4. ↑ "Slavery Era Policies Report August 2004". Illinois Department of Financial & Professional Regulation.
  5. ↑ Blake McKelvey. "Susan B. Anthony" (pdf). Rochester History. Retrieved 2007-01-08.
  6. ↑ Alexander B. Grannis, Chairman; et al. "The Feeling's Not Mutual". New York State Assembly. Retrieved 2007-01-08.
  7. ↑ "New York Life Will Not Participate In Treasury Capital Program". New York Life Insurance Company. Retrieved 2009-02-03.
  8. ↑ "Ted Mathas Becomes Chairman of the Board of New York Life on June 1". New York Life Insurance Company. Retrieved June 19, 2009.
  9. ↑ "What the Rating Agencies Say". New York Life Insurance Company. Retrieved 2009. Check date values in: |access-date= (help)
  10. ↑ "New York Life Insurance Company Review - INSURANCE COMPANIES in New York, NY - BBB Business Review - BBB serving Metropolitan New York, Long Island, and the Mid-Hudson Region". www.bbb.org. Retrieved 2016-08-24. line feed character in |title= at position 32 (help)
  11. ↑ "FindLaw's California Court of Appeal case and opinions.". Findlaw. Retrieved 2016-08-24.
  12. ↑ "Market Conduct Report - State of New Jersey" (PDF). NJ.gov. 2008.
  13. ↑ "New York Life Hit with Annuity Fraud Lawsuit". 2013-12-16. Retrieved 2016-08-24.
  14. ↑ "FindLaw's California Court of Appeal case and opinions.". Findlaw. Retrieved 2016-08-24.
  15. ↑ "Consumer Information for NYLIC (2005)". NAIC. Retrieved 2007-01-06.
  16. ↑ "Consumer Information for NYLIAC (2005)". NAIC. Retrieved 2007-01-06.
  17. ↑ "Assets Under Management". New York Life Investment Management LLC. Retrieved 2007-01-03.
  18. ↑ "About NYLIM Retirement Plan Services". New York Life Investment Management LLC. Retrieved 2007-01-03.
  19. ↑ http://www.newyorklife.com/about/new-york-life-sell-surety-bond-operation-mexico-global-insurer-ace-group
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