Ny Life Annuities

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REV: MARCH 3 0 , 2 0 1 1
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Professors Julio J. Rotemberg and John T. Gourville prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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Through its network of agents and subsidiaries, it offered life insurance, long-term care insurance, immediate annuities, investment annuities, mutual funds, retirement planning services, and institutional asset-management services.
In 2008, across these product lines, NYL had nearly $250 billion in assets under management, $14 billion in operating revenue, and $1.28 billion in operating profits (see Exhibit 2). These figures placed the company 76th in Fortune’s 2009 ranking of the top U.S. firms.
Starting with its founding in 1845, NYL also was distinguished by being a mutual insurance company. Unlike a stock-based insurance company, a mutual insurance company was owned by and run for the benefit of its policyholders. As such, any profits it earned typically were either reinvested in the company for the benefit of its policyholders or paid to policyholders in the form of a dividend. (NYL had paid a dividend in every year since 1854.)
Commenting on the benefits of mutualization in the wake of the 2008 financial crisis, Sy Sternberg, then NYL’s Chairman of the Board, noted:
Back in 1997, most mutual life insurance companies decided to demutualize and become public companies, so that they might have access to public capital. We decided against that move for two reasons. First, insurance is a

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