Scott Stolz: "We’re trying to know the unknowable"

Q. How did you determine which insurers’ products to pull and which ones to continue to offer on the annuity platform, especially since American International Group Inc. was being rescued by the federal government and The Hartford Financial Services Group Inc. and Lincoln National Corp. were relying on government aid?

A It wasn’t AIG that made us nervous. We never looked at them as an insurance company issue; it was obvious that the other part of the company caused the problems.

But when companies lined up for [the Troubled Asset Relief Program], that made us pause — and when share prices kept falling. I’ll never forget the chart I put up at the Raymond James Financial Services national conference in March 2009.

I did a presentation for advisers on the state of the insurance industry. We put up the share prices from before the crisis. It was shocking to see Hartford go from $90 per share to about $3. Genworth was at 78 cents per share. I made it clear that I’m not a stock analyst, that the market is pricing these as if they’re going out of business but I don’t see that happening. It was our opinion they had ample liquidity. But through it all, we kept looking at each other: What if we’re wrong? One of the people on our committee had the best quote to sum it up: The problem is we’re trying to know the unknowable.

The only company we suspended sales for was AIG. They were taken over by the federal government three days later.

There were companies we shied away from and took off of our fixed-annuity quote rates list. We made them unavailable.

Scott Stolz

— as told to Darla Mercado

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