In-Force Management

M Financial believes that performance and cost must be measured over the life of an insurance product, not within in the initial illustration or the first year premium.

M Financial believes that existing policyholders should be treated as well as new policyholders.

In-Force Management Principles

  • Collaborate with Partner Carriers and align interests and philosophy.
  • Segregate M Financial’s superior experience—do not dilute quality with data from non-Member Firm clients.
  • Track experience and performance diligently.
  • Pass on improvements in underlying experience to existing clients.

Product Development and Pricing

M Financial reinsures proprietary products through M Financial Re, its wholly owned reinsurance operation. By investing upwards of $50 million a year in the high quality business placed by its  Member Firms, M Financial has access to Partner Carrier pricing assumptions and can effectively track experience, while monitoring changes in policyholder interests.

Sharing risk also aligns the interests of M Financial and its Partner Carriers, which facilitates the development—and ongoing management—of products designed to outperform over the long term.  Product pricing is driven by three experience components: mortality, persistency, and average face amount.  M Financial’s favorable experience creates pricing advantages for Member Firm clients.

Individual Underwritten Mortality Experience

M Financial Aggregate
Industrial > $1 Million
Industrial Aggregate
79%
89%
100%
Info Graphc 1

M Mortality Experience

(actual death claims) is 14% less than the industry high net worth segment (face amounts greater than $1 million), which lowers cost of insurance charges for M proprietary life products.

Source: Society of Actuaries Individual Life Experience Report (2010) and M Financial Group.
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Policy Lapse Rate

M Financial
Moody's Median
2.0
9.9

1.9
10.8

7.1
11.5

4.7
10.5

6.7
10.0

5.5
9.9
2007
2008
2009
2010
2011
2012

M Lapse Experience

Over the past five years, and in the wake of the financial crisis, M Financial’s lapse experience – policies that lapse or surrender – has averaged nearly 60% lower than the industry. This provides a longer time horizon for Partner Carriers to recoup initial expenses, which drives lower ongoing policy charges for M proprietary life products.

Source: Moody's Statistical Handbook for Life & Health (2014) and M Financial Group.
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Average Face Amount (Millions)

M Financial
Largest 100 Life Insurance Companies
2.00
0.27

1.70
0.25

2.60
0.25

2.30
0.25

2.40
0.27
2009
2010
2011
2012
2013

M Average Face Amount

is nearly seven times that of the industry, providing economies of scale which lower policy charges for M proprietary life products.

Source: A.M. Best Company Best's Statement File (2014) and M Financial Group
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When better than expected experience emerges, M Financial works with the Partner Carriers to reprice the products—for both new sales and in-force business.

This approach ensures that existing policyholders receive the value of the repricings, which are created by their superior mortality, persistency, premium volume, and expense experience, while creating an opportunity for new buyers to participate in the enhanced pricing of the product going forward.

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