plansto poach business from competitors when the Labor Department's Conflict of InterestRule takes effect, betting that the new regulations will make its higher-rated productsmore attractive to customers.
The insurerboasts a diversified distribution system that should insulate it from much of therule's impact, co-President and co-CEO Stephen Lindner said during a May 3 earningscall, and a lineup of offerings that are simpler and less commission-dependent thanmany of its rivals. The Conflict of Interest Rule, commonly known as the fiduciaryrule, aims to raise thestandards for the advice and products sold to retirement savers.
"Ithink we come out far better than many of our competitors because of the makeupof our distribution," Lindner said. "Our model and our high ratings putus in a position to perhaps capture some of the premium dollars that are movingaway from some of the other companies."
AmericanFinancial sells just 11% of its annuities through insurance-only agents or non-registeredrepresentatives in its retail channel, which is the slice that the company estimateswill be most affected by the fiduciary rule. While the regulations will also forcethe rest of its distribution channels to address their respective procedures, theimpact is not expected to be as significant.
"Thereis going to be an adjustment period for banks, for broker/dealers, for registeredinvestment advisers, but I think they're going to figure out how to deal with thenew regs," Lindner said.
AmericanFinancial will also make adjustments to its business model, including potentiallyadding new products and altering its compensation arrangements, he added. That couldcreate some additional costs and disrupt sales in the short term, though not tothe degree that the company expects to see with several of its competitors.