Symetra Financial seeks a symmetrical balance of work, retirement, and life insurance products. The holding company's subsidiaries offer life insurance, annuities, retirement plans, health insurance, and employee benefit plans to some 1.8 million customers throughout the US. Its workplace products include such goodies as medical stop-loss insurance, disability insurance and group annuities. These products are distributed by brokers, independent agents, financial institutions, and third-party administrators. For individual consumers, Symetra offers annuities, individual retirement accounts, and life insurance sold through banks.
Symetra completed an IPO in early 2010. The company, which earned proceeds of some $283 million from the IPO, intended to use the proceeds for general purposes, including bolstering its subsidiaries. Its primary investors, Berkshire Hathaway and White Mountains Insurance Group, earned proceeds of another $115 million from the IPO.
Symetra distributes its products across the US through a network of more than 21,000 brokers and agents, as well as some 25 key institutional partners. While selling and underwriting life, health, and accident policies and issuing annuity accounts are its main business activities, the company earns more from investment income (nearly 65% of revenues) than from insurance premiums, which leaves it somewhat vulnerable to market fluctuation.
After taking a hit financially in 2008 due to the economic downturn, Symetra returned to revenue growth in 2009 and continued on an upward trajectory through 2011. Sales increased by more than 6% in 2011 to some $2 billion. The firm also reported profit growth in 2009 and 2010; however, net income experienced a slight decline (less than 1%) to some $200 million in 2011 as Symetra experienced a decrease in net realized investment gains (largely due to stock market fluctuations).
Symetra's top strategy for growth is selling "simple to understand" products -- which strongly appeal to consumers who are increasingly anxious about their retirement investments. This method is increasingly important as the firm seeks to capitalize on the aging of the "baby boomer" generation, which is creating a larger market need for retirement products. And, Symetra's conservative investment philosophy stands in contrast to some of its competitors, whose bottom lines and reputations have been tarnished by complex and risky investment practices.
At the same time, the firm balances out its risks by maintaining operations in a diverse range of businesses. For instance, in 2011 it strengthened its medical insurance operations by acquiring the renewal rights on stop-loss policies issued by American United Life (AUL, a unit of OneAmerica) for some $26 million. Following the purchase, Symetra is focused on customer growth and retention efforts to further enhance the stop-loss medical segment. In addition, to better reach mid-sized business customers, Symetra launched a new claims management unit in 2012 to help employers monitor short-term disability policies.
Other internal product expansion efforts include adding the Symetra Classic universal life policy for customers with long-term needs in 2011. To diversify its annuity offerings beyond its traditional product categories, Symetra launched a fixed index annuity, Edge Pro, in 2011. In addition, it introduced its new True VA variable annuity to attract customers seeking enhanced investment flexibility in 2012. The company has also expanded by establishing more distribution relationships with new banks and brokers.
Investor group Berkshire Hathaway and property/casualty insurance firm White Mountains Insurance each own 21% of Symetra. The two companies together owned a majority of Symetra's stock prior to its 2010 IPO. – less