llmerica Financial Services has started to transition its financial-advisor distribution channel into a broker-dealer sales group. The changes involve re-training its 700-member sales force to focus more on marketing third-party investment products, according to a spokesman at the firm.
The restructuring efforts will entail a further reduction in headcount, the spokesman said, declining to comment on actual numbers.
Also, the company recently stopped marketing variable annuity products through independent broker-dealers and mutual-fund wrap channels. Allmerica will also stop selling those products through its redirected sales force. All the changes were prompted by the recent turmoil in the equity markets, he confirmed.
The decline in the equity markets has resulted in a rise in claims-related expenses, lower fee income, higher deferred acquisition cost amortization and higher statutory capital reserve requirements for the insurer. "The reduction in statutory profits associated with these items also exacerbates the strain on statutory capital associated with continued sales of variable annuities," said the company in a release.
"As we implement these changes to our life and annuity operations, Allmerica will become a smaller asset accumulation operation, focused primarily on management of the existing in-force assets in our products as well as continuing to increase the distribution of third-party asset accumulation products through our Advisor channel," said John F. O'Brien
, Allmerica's president and chief executive officer, in a company release.
Allmerica Financial Corporation, the parent, reported a net operating loss for the second quarter of $0.52 per share, or $27.7 million, compared to net operating income of $1.11 per share, or $58.9 million in 2001.
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