President's Messages

 

ROBERT R. CARTER, CLU, ChFC - AALU President

Bob Carter is currently Chairman Emeritus of PartnersFinancial, one of the industry's premier producer groups. 

 

Beginning in 1976, Bob developed a significant insurance and benefits practice in Austin, Texas.  In 1987, he co-founded PartnersFinancial with Bruce Callahan.  In 1999 he was one of the three people who founded National Financial Partners

 

Bob has been a member of AALU since 1987.  He is a current AALU Board member and President-elect.  He has also been a member of the International Forum since 1981 and has served on their Board as well. 

 

Bob holds the CLU and ChFC degrees from The American College, as well as a Bachelor of Arts from Howard Payne University, where he currently serves as a Trustee,  and a Masters degree from Southwestern Seminary.  He resides in Austin, Texas with his wife of 32 years, Cindy.  His main interests are his 4 children, 2 grandchildren, and hunting in Mexico and Africa.  He is an avid golfer.

 

June 2009

+ 6/8/2009 - Possible Changes to Valuation Discounts on the Horizon


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In addition to AALU’s primary role in influencing tax issues affecting advanced life insurance planning, a major benefit of membership is practitioner/counsel insight on what legislative/regulatory developments and proposals mean in terms of the marketplace and cutting edge sales ideas.

Both the Administration, in its recently released ‘Greenbook,’ and Rep. Earl Pomeroy (D-ND), in H.R. 436, have proposed to limit the availability of certain entity discounts affecting closely held businesses.  AALU’s Business Insurance and Estate Planning (BIEP) Committee have been exploring these proposed limitations and assessing how best to utilize opportunities in the current environment and prepare for expected changes.

At the request of the Committee, we reported to you on the details of the proposed changes in Washington Report Bulletin 09-63.  The report set forth the background on the types of discounts currently used by individuals and businesses, and summarized the proposals and rationale behind limiting those discounts.  Subsequently, AALU will release a sequence of materials to address these changes.  These include an AALU Summer Quarterly article featuring a Q & A with questions prepared by the Committee and answered by David Adams.  Mr. Adams is president of Adams Capital, Inc., and an expert in the valuation of businesses, business interests, and gift and estate tax planning.

To round out the programming, we will be flushing out the details of the Summer Quarterly article in and educational webinar on August 5th, with a panel including Ken Kies, Ken Samuelson, Kathleen Bilderback, and Bob Rubin.  AALU members will take away the following:

  • - an understanding of current political dynamics regarding estate tax reform,

  • - glean the legal perspective on proposed legislative changes to valuation discounting,

  • - foresee a practitioner’s perspective on ways to maximize the opportunities, and

  • - be able to ask the panelists questions on how to prepare for the future.


If you have any questions or comments, please feel free to email me.

 


May 2009

+ 5/15/2009 - Treasury Officially Offers Aid to Life Insurers


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Today, the Wall Street Journal underscored the role that our industry plays in the health of America’s economy by stating, “the life insurance industry is a lynchpin of the financial system, providing millions of Americans with a safety net, and is an important source of savings and wealth management…insurers are also big sources of capital throughout the economy, as they invest the premiums they receive from customers into bonds, real estate, and other assets.”

The aforementioned quote accompanied an announcement that $22 billion in federal aid would be distributed to qualifying firms. To date, six life insurance companies have been approved for funds, while only two have formally accepted. This decision is the culmination of months of speculation across the industry as to whether insurance companies would qualify for aid and what amount would be allocated to applicants.

 

Clearly, many life insurers have been affected by the economic downturn.  For example, credit rating downgrades and commitments to variable annuity products have tested the strength of companies.  Yet, the industry taken as a whole remains stable. In fact, confidence in life insurance companies is on the upswing, with the Dow Jones Life Insurance Index rallying by more than 7 percent yesterday. Additionally, as reported by MarketWatch this morning, life insurance futures are increasing as today’s news further bolstered the confidence that American’s have in our industry.

 

It is apparent that the flight to the reliable and durable products offered by life insurers will be instrumental in our recovery and sustained economic prosperity. AALU will continue to advocate for the protection of our products so that are members are afforded the ability play their critical role in the lives of 75 million American families.



April 2009
+ 4/9/2009 - Life Insurance Companies on Solid Ground


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This week, reports surfaced announcing that the Treasury Department may extend TARP funds to life insurance companies. The vast majority of life insurers are stable and capable of weathering economic storms. State regulators closely monitor capital reserves, which supply a strong safety net for policyholders, and statistics show that even in the midst of economic recession, annual underwriting results have been steady and are not expected to decline this year.

A Market Watch article published today reiterated these facts, relying on reputable market experts. For example, NAIC President Terri Vaughan emphasized that life insurers have ample backup capital and remain viable. Vaughan asserted that even if the economic downturn impacts near-term operating results, insurers are in no way in jeopardy of being unable to provide payouts to their clients.

Moreover, even as select insurers have received ratings downgrades, A.M. Best analyst Andrew Edelsberg said those downgrades were driven by investment losses and rising levels of risk rather than a danger of insolvencies or underwriting issues. Further, experts view the industry, on a whole, as very sound, with Edelsberg describing the average insurer's rating as excellent. He added, "It's like saying someone who is rich loses a little bit of money," he said. "They're not as rich, but they're still rich and they're not going from rich to poor."

It is important to dispel rumors and help restore consumer confidence. Furthermore, I encourage you to reach beyond your clients, and join me next month in Washington, DC at our Annual Meeting. We will take our positive message to Capitol Hill so that lawmakers can in turn inform their constituents of the benefits provided to millions of Americans by our industry.

 


February 2009

+ 2/4/2009 - The Three Thin Threads


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I’m known for saying it like it is. For most of you this will be a wake up call. For the rest, you’re to be congratulated for already taking action to protect your clients and business.

 

You know how volatile the environment has become. We have a new president, a new administration, a new Congress, uncontrolled spending, bailouts, and a national deficit that is north of a trillion dollars. The Federal government needs money and lots of it. So what’s that got to do with your business? Plenty. Our “three thin threads” are in danger and need to be protected.

 

I said in my first address as AALU president that we need to act more like the 300 Spartans who fought heroically to defend their ground.

 

While AALU is certainly being proactive, there is only so much that the leadership, staff and counsel can do on its own. The truth is that our strength is in numbers. When we gather in our nation’s capital this spring for the Annual Meeting, imagine the show of force we could have on Capitol Hill if every member attended. Now imagine our impact if every member also brought an associate; someone who should be an AALU member.

 

These are trying times; unprecedented times. We cannot afford to have any AALU member sitting on the sidelines, watching from a distance. This is your call to action; to take a stand for what you believe in. Together, en masse with one unifying voice, we’ll be better able to protect and preserve advanced life insurance planning as we know it. You owe it to yourself and your clients to help make the 2009 meeting our largest event ever.

 

Once again, I urge you to pick up your sword and join us in Washington, May 3-6. It’s never been more important to attend!

 


January 2009

+ 1/6/2009 - Provide Input on 2009 LCP Endorsed Candidates


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Your input is critical in choosing the LCP’s 2009 Endorsed Candidates as AALU works to protect life insurance and specific uses like nonqualified deferred compensation; secure permanent estate tax reform that facilitates estate planning; and impact the shape of regulatory reform.

 

The LCP selection committee is composed of AALU members and gives serious consideration to recommendations made by any member. Please provide your thoughts by reply email before COB Thursday, January 8 so that the committee can include your recommendation when it selects the Endorsed Candidates next week.

 

Substantively, recommendations of current federal legislators as potential Endorsed Candidates are evaluated by party leadership status, service on key committees (tax-writing and potentially banking/financial services), influence, in-cycle or out-of-cycle for reelection, geography, and support of our issues.

Please contact Justin Brown of AALU with any questions, comments, etc. He can be reached at 202-772-2493 or at brown@aalu.org.

 

The relationships we build with key legislators make a tremendous difference. Thank you in advance for your input on our Endorsed Candidates. We have much at stake in the year ahead!

 
+ 1/22/2009 - Qualify for the LCP by Feb. 2

 

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Thank you to the more than 350 AALU members who have qualified for the 2008 Legislative Circle Program (LCP).  Click here to see a full list of 2008 qualifiers.

 

It’s not too late to qualify.  We are accepting 2008 LCP contributions until Monday, February 2nd. You must qualify for the 2008 LCP to be recognized at the 2009 Annual Meeting this May. 

 

There is a reason why the current AALU Board has the most Platinum qualifiers in AALU’s history—LCP helps build relationships with key legislators which make a tremendous difference in AALU’s ability to (1) secure permanent estate tax reform which facilitates estate planning; (2) protect life insurance and specific uses such as funding of nonqualified deferred compensation; and (3) influence the shape of regulatory reform.  As the scope of matters coming to government attention grows—the financial rescue, economic stimulus, regulatory reform, health care, government spending, and taxes—so does our need to communicate the tremendous value provided by life insurance and to impact issues affecting advanced life insurance planning.

 

To qualify, just follow the five simple steps described in the attached brochure.  If you have any questions or if we can provide help or further information, please respond to this email or contact Justin Brown (202-772-2493; brown@aalu.org) or Mark Valentini (202-742-4638; valentini@aalu.org) at AALU.  

 

Thank you for your time and consideration.

 
+ 1/29/2009 - Facing the Financial Crisis

 

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The current financial meltdown has led to reinvigoration of the debate over a federal insurance presence. In 2009, Congress will consider financial services regulatory reform that could include life insurance and AALU will be prepared and engaged in the debate.

 

To date, Former Secretary Paulson’s Treasury Blueprint has been the only large-scale reform proposal. To read our Bulletin on the Treasury Blueprint, please click here. Additionally, two weeks ago, the Government Accountability Office (GAO) issued a Framework Report highlighting five key changes in financial markets that have lead to an ineffective regulatory framework, and offered its own proposed framework. We also anticipate that Secretary Geithner will propose a framework on behalf of the Obama Administration in the coming months.

 

The flurry of proposals indicates that AALU must remain vigilant in monitoring all legislative and regulatory proposals. Congressional leadership, like Congressman Barney Frank, continue to advocate for systemic oversight, which may include broad powers being housed in the Federal Reserve. This may require compliance with both federal and state regulators. Furthermore, new regulators, like Mary Shapiro of the SEC (previously head of FINRA) has made remarks in the last couple of years on the need for strong consumer protection–whether the product is insurance, securities, banking or investment advice–with standards for suitability, disclosure, advertising and qualifications and training of salespeople. As you know, the SEC has categorized indexed annuities as securities and raised a number of concerns about annuity sales to seniors. These dynamics seem ripe for potential broader future securities regulation of life insurance products.

 

The debates will play out over the coming months. In the meantime, there may be interim steps; last week House Representatives sent a letter urging an office of insurance information. AALU wants to make you aware of these developments and our preparedness to date: (1) the regulatory reform committee will monitor and develop policy on regulatory issues affecting the advanced markets, (2) staff and counsel will work with our industry allies to coordinate a response, and (3) the securities regulation committee will monitor all developments in the SEC and work to foster better understanding of life insurance products by securities regulators.

 

To comment on Regulatory Reform, click here.