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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 8, 2000
ReliaStar Financial Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-10640 41-1620373
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(State of Incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
20 Washington Avenue South
Minneapolis, Minnesota 55401
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(Address of principal executive offices) (Zip Code)
(612) 372-5432
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(Registrant's telephone number)
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Item 5. Other Events
On February 8, 2000, ReliaStar Financial Corp. conducted a regularly
scheduled meeting with securities analysts in New York, New York. A summary of
material distributed to those who attended the meeting is filed as an exhibit
to, and incorporated by reference in, this report.
Item 7. Financial Statements and Exhibits.
Exhibit
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99 Summary of ReliaStar Financial Corp. February 8, 2000 Analysts' Briefing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIASTAR FINANCIAL CORP.
Date: February 8, 2000 By: /s/ Richard R. Crowl
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Richard R. Crowl, Senior Vice President,
General Counsel, and Secretary
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RELIASTAR
New York Analyst Meeting
February 8, 2000
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Stated Financial Objectives
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o 12-14% annual growth in operating earnings per share
o 16% operating income-based ROE
o 13% annual growth in statutory premiums, deposits and fee revenue
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Meeting Our Financial Objectives
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o Continued Top Line Growth
o Operating Margin Improvement
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Top Line Growth: Market Opportunity
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Changing Wealth Paradigm:
[GRAPHIC APPEARS HERE]
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Top Line Growth: Market Opportunity
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Low End of the High Net Worth Market:
Net Worth U.S.HHs 5-year
($ mm) (000's) Growth (%)
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Greater than 5 30 25%
1 - 5 6,100 40
.5 - 1 9,500 20
Source: PSI, 1997
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Top Line Growth: ReliaStar's Momentum
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o Multi-channel distribution
o Cross-selling
o Asset gathering
o Asset management track record
o Consumer financial education experience
o Internet marketing
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Top Line Growth: Asset Gathering/Management
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o RLR distribution leverage
- Twin Towers
o RLR product breadth
o Pilgrim
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Top Line Growth: Pilgrim
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Fund Performance
[DESCRIBES RECENT PERFORMANCE STATISTICS]
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Enterprise Cross-Selling Results
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($ in millions)
[GRAPH APPEARS HERE]
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Top Line Growth: Consumer Financial Education
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o It's marketing !!
o From "push" to "pull"
o Has application throughout RLR
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Top Line Growth: ReliaStar Sales Records in 1999
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TOTAL INSURANCE PRODUCT SALES
Total Individual Products
Individual life insurance
Individual variable annuities
Total Worksite Products
Group life insurance
Voluntary payroll deduct insurance
401(k) plans
MUTUAL FUNDS DEPOSITS
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Operating Margin Improvement
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o Consolidation of redundant functions
o Process re-engineering
o Internet service delivery
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Operating Margin: Business Consolidations
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o Individual Life and Annuities:
- from 10 operating units in 1997 to 2 in 2000
- customer service center consolidation in 1999-2000
o Worksite Financial Services:
- Four divisions now under common management
- Strategic exit from medical business in 1998-1999
o Enterprise wide expense initiatives (totaling $50 million): 1998-2002
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Operating Margin: Process Re-engineering
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o Activity Value Analysis
o Technology
o Internet
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Operating Margin: Improving Expense Ratio
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($ in millions)
1990 1994 1998 1999 4Q00P
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Statutory Premiums
and Deposits $1,140 $1,810 $3,308 $3,949
Operating Expenses* 245 248 404 395
Expense Ratio 21.5% 13.7% 12.2% 10.0% 9%
*Life insurance companies' operating expenses
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Internet Strategies
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Contribute to:
o Top Line Growth and
o Operating Margin Improvement
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The Internet
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Faster Break-Through
Cheaper Application
Better
Consumer
Retail Distribution
Worksite
o Operating margin improvement
o Top line growth via "New Economy" marketing
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Top Line Growth: Market Opportunity
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Changing Wealth Paradigm:
[GRAPHIC APPEARS HERE]
Source: The 1998-99 MacroMonitor
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Meeting our Financial Objectives: Summary
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Operating Earnings
RLR Segment Growth Rate vs. RLR Target
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RLA Just Under
WFS Over
Reinsurance Right On
Asset Management Well Over
Total 12-14%
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Pilgrim Funds/
Asset Management
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Pilgrim Funds
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Three Business Segments
o Closed-end fund
Pilgrim Prime Rate Trust (PPR:NYSE)
$1.7 billion
o Structured finance
10 CLO's/CBO's
$3.6 billion
o Open-end funds (includes variable and institutional products)
44 accounts
$9.3 billion
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Open-End Fund Business
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Pilgrim Funds
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Full Product Range: 26 Funds
[PIE CHART DESCRIBING ASSET CLASSES APPEARS HERE]
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Pilgrim Funds
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Diversified Asset Classes = $9.3 billion
[PIE CHART DESCRIBING $ BALANCES BY CLASSES APPEARS HERE]
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Pilgrim Funds
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Distribution - Non Proprietary (Loaded)
Wirehouse: 7 Independent: 896
o Merrill Lynch o SunAmerica Securities
o Prudential-Securities o Linsco Private Ledger
o PaineWebber, Inc. o Raymond James
o Salomon Smith Barney o WSSI
o Morgan Stanley Dean Witter o PrimeVest
o A.G. Edwards o Charles Schwab
o CIBC Oppenheimer TOTAL: 903 firms
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Pilgrim Funds
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[USA MAP APPEARS HERE]
Channel: Wirehouse
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Pilgrim Funds
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[USA MAP APPEARS HERE]
Channel: Independent
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Pilgrim Funds
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Open-end fund sales ($M)
[GRAPH DESCRIBING 1998 AND 1999 APPEARS HERE]
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Pilgrim Funds
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Sales by Month ($M)
[GRAPH DESCRIBING SALES BY MONTH APPEARS HERE]
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Pilgrim Funds
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Diversified Fund Sales in January - Total $627M
[PIE CHART DESCRIBING SALES BY ASSET CLASSES APPEARS HERE]
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Pilgrim Funds
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Disciplined Selling Process
o Sales Force Fully Deployed
o Scripted Presentations
o Timely Follow-Up
o Management Controls
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Pilgrim Funds
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[DESCRIBE PUBLICLY AVAILABLE PERFORMANCE STATISTICS]
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Pilgrim Funds
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2000 New Initiatives:
Variable Annuity Business Distribution
o Non Proprietary - 903 Firms with 15,000 active Reps
o Proprietary
.. Washington Square Securities - 2,600 Reps
.. PRIMEVEST - 1,400 Reps Utilize Expanded Wholesalers Complement
Utilize Expanded Wholesalers Complement
o Proficient
o Well Informed
o Single Point of Contact
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Pilgrim Funds
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(in millions, except EPS)
Accretion to EPS in 2000
1999 earnings for Pilgrim $15.9
Estimated CY2000 earnings growth
(incl. Nicholas-Applegate, new structured
financing transactions, other AUM growth) 6.5
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Estimated 2000 Pilgrim earnings 22.4
Estimated expense savings (pretax $9) 5.4
Estimated earnings from cross-selling 2.0
Estimated interest on new debt issued (6.7)
Estimated goodwill amortization (7.8)
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Estimated incremental earnings in 2000 $15.3
New RLR shares issued 3.1
Estimated EPS on new shares $4.94
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Internet Strategies
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Internet Solutions for the Life Insurance Industry
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Faster Break-
Cheaper Through
Better Application
Consumer
Retail Distribution
Worksite
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Internet Strategies: Consumer
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Faster Break-
Cheaper Through
Better Application
Business-to-Consumer
Improved delivery of service and information:
- consolidated data store supports website access to customer account
information
Marketing through financial education:
- unique, "irreverent," entertaining, non-sales-oriented website
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Retail Internet Marketing
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"Ihatefinancialplanning.com"
o User-friendly, entertaining website dealing with wide range of
financial planning subjects
o Educates consumers in non-sales-oriented "safe haven" environment
o Walks consumers through the steps of preparing detailed financial
plans
o Generates qualified leads for RLR producers, or consumers may choose
other fulfillment options
o Initial release: 2Q00
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Consumer Research Findings
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o Is the "IHFP" concept marketable?
- 77% said they hate financial planning
- 72% said they don't have a plan
- 70% said that financial planning was important
- 66% said they would visit a site called IHFP.com
o Reasons cited for disliking financial planning: lack of time; don't
know where to start; afraid of what they will find out; fear of high
pressure sales
[Based on 1,272 consumer responses from online survey of 12,000 internet users]
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Consumer Research Findings, cont.
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o What will be viable fulfillment options?
- consumer builds own financial plan, with some guidance
- consumer chooses referral to a financial education seminar or
qualified financial planner/advisor
- consumer chooses direct options, by phone or e-mail
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"I Hate Financial Planning.com"
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[PICTURE OF WEB PAGE]
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Internet Strategies: Retail Distribution
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Faster Break-
Cheaper Through
Better Application
Business-to-Business-to-Consumer
o Improved delivery of service and information for distributors
o Automation of paper intensive processes
o "Virtual" wholesaler
o Link to financial education content for both registered reps and
consumers
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Internet Strategies for Retail Distribution
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o Field technology for our independent producers:
- "ReliaStar Extra" website: complete resource for producers
- "ReliaStar Presents" software: powerful, online `inforce
illustrations'
o Support for the registered reps of our broker/dealers:
- "e-toolbox" internet-based communication system and support
materials
- full online trading capabilities
- marketplace services
- customers' direct access to on-line account data and trading (in
pilot)
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Retail Distribution Strategies (cont.)
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o Virtual Wholesaler:
- transforms wholesaling approach to third-party broker/ dealers
- just-in-time sales ideas and support
- advanced sales training (e.g., estate planning)
- audio and video capabilities bring fund managers and human
wholesalers to the desktop of independent reps
- initial release: summer of 2000
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Internet Strategies: Worksite
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Faster Break-
Cheaper Through
Better Application
Business-to-Business (-to-Consumer)
o Improved delivery of service and information to both plan sponsors and
plan participants
o Automation of paper intensive processes
o Desktop enrollment/ electronic data exchange
o Market to consumers at the worksite through employer intranets
(leveraging retail website capabilities)
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Internet Strategies for the Worksite
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o Front-end sales: bidding process
o Enrollment and administration of benefits
o Self-service for benefit plan participants
o Marketing to consumer at the worksite (link to IHFP.com education
content)
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Worksite Financial Services
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Worksite Financial Services
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Comprised of Four Business Units . . .
ReliaStar Employee Benefits
REB
Group and
Voluntary Products
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ReliaStar Payroll Deduction
RPD
Payroll Deduction
Individual Products
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ReliaStar Retirement Plans
RRP
401(k) and Pension
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Worksite Advisory Services
WAS
Financial Advisors
MoneySense
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Worksite Financial Services
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1999 Highlights
o Sales increases of 32%
o Trustmark/medical transition complete
o Earnings at expectations
o Internet activity accelerating
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Worksite Financial Services
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Sales Results
($ in millions) 1998 1999 Variance
---- ---- --------
Group $ 83 $107 + 29%
401(k) 453 600 + 33%
Payroll Deduct 16 21 + 34%
TOTAL $552 $728 + 32%
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Worksite Financial Services
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Earnings
o 1999 earnings increase of 7% was lower than recent years run rate of
17.5%
o 1999 growth rate reduction is attributable to discontinued lines
o Medical transition is complete
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Worksite Financial Services
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Earnings Growth Initiatives
o Earnings growth is the Division's overriding objective
o Objectives will be achieved with both Tactical and Strategic
Initiatives
- Continuation of existing initiatives
- Pursuing new strategies
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Worksite Financial Services
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Tactical Initiatives:
1. Continue Sales Office/Staff Expansion
o Total Sales Staff - 121 (+34% in 3 years)
o Number of offices - 45
o 4 new offices opened in 1999
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Worksite Financial Services
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Tactical Initiatives:
2. Further Exploit Cross Sales Opportunities
o 1999 Cross Sales were up 27%
o Example of Cross Sales Successes:
Payroll Deduct Cross Sales ($ in millions)
1996 1997 1998 1999
---- ---- ---- ----
$1.3 $3.1 $4.5 $7.6
o Similar experience with Group cross selling 401(k) products
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Worksite Financial Services
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Tactical Initiatives:
2. Further Exploit Cross Sales Opportunities (cont'd)
o Generating increased incremental sales as a result of cross selling
o Percentage of reps producing cross sales continues to grow (50% in
1999)
o Higher expectations for 2000
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Worksite Financial Services
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Tactical Initiatives:
3. Asset Gathering via 401(k)
o Pilgrim performance is "saleable"
o Pilgrim funds added to "sub advised" offering
o Exploring non-group annuity based Pilgrim fund offerings
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Worksite Financial Services
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Tactical Initiatives:
4. Worksite Advisory Services
o Life sales up 36%
o One-on-ones per advisor up 36%
o Revenue per adviser up 97%
o WAS continues to be a key differentiator producing incremental core
product sales for WFS
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Worksite Financial Services
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Strategic Initiatives:
Current Internet Status
o 401(k) capability
o Payroll deduct completed first internet enrollment for payroll deduct
in December.
o Group market now progressing
- Electronic data exchange
- Bid/proposal/underwriting
- Enrollment process
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Worksite Financial Services
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Strategic Initiatives:
1. Core Business Internet Initiatives
o Strategy
- Implementing new group/payroll deduct administration system
- Developing capability to interface with multiple technology
companies/distributors
- Considering several investment opportunities to acquire data
exchange, enrollment, and billing capability in order to gain
more control of the process
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Worksite Financial Services
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Strategic Initiatives:
2. Small Group Capability
o Reviewed several acquisition targets in 1999
o Technology driven market
o Expansion into 50 to 500 market
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Worksite Financial Services
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Strategic Initiatives:
3. Retail marketing enabled through internet/data enhancements
o Retail opportunities due to higher volume and quality data
with internet capabilities and access
- Data available through group internet enrollment may help segment
financial needs
- Paid access to financial advice both on internet, e-mail, or
telephone
- IHFP/other ReliaStar initiatives
- Asset gathering
o Internet access/data in conjunction with WAS Advisors
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ReliaStar Life & Annuity
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ReliaStar Life & Annuity 2000
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[GRAPHIC APPEARS HERE]
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Consolidation/Integration Benefits
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Optimized resources through centralized:
o Senior management
o Financial management/reporting
o Service operations
o Marketing
o Product management
o Internet-based technology
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Business Drivers
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o Optimize multi-product/multi-channel strategies
- Risk management
- Asset gathering in partnership with Pilgrim
o Fully integrate WSSI marketing support
o Leverage training and education platforms
o Focus on variable annuity sales
- Wholesaling alliance with Pilgrim
- TSA and Brokerage channel strategies
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Product Management Culture
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o Monitor competition, marketplace & distribution needs
o Deliver low-cost protection and asset-gathering designs
o Emphasis on asset gathering design
- VA / VUL
- Pilgrim buckets
- Enhanced service class
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Product Emphasis
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o Variable life
- Multiple markets
- Multiple channels
o Variable annuities
o TSA [403(b)]
o Low-cost protection
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Marketing Initiatives
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o Estate planning "in a box"
o Seminar lead generation
o Business owner strategies
o Annuity maximization
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Cross-Selling Competencies
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Foundation for
cross-selling:
o Specialized distribution channels
o Broad product awareness
o Trust services
o Integrated compensation packages
o Training
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Cross-Selling Competencies
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o Years of skill building under our belt
- Management of channel thrash
- Educating distribution on offerings
- Motivating sales management/distribution
o Ready to apply technique to new acquisitions
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RLA Cross Sales
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Annualized New Premiums and Deposits
($ in millions)
[BAR CHART]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Cross Sales $9 $37 $69 $131 $193 $255
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Note: Includes sales of life insurance, annuities and mutual funds.
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Expense Management
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o Alignment of technology with core strategies
o Deliver Service Center phases on schedule, on budget, with required
technology enhancements
o Resource management and crisp execution in light of:
- multi-location
- multi-channel
- multi-product lines
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RLA Operating Income
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($ in millions)
1996-1999 CAGR: 14.9%
1996 1997 1998 1999
---- ---- ---- ----
PFS 60.5 77.9 100.3 109.9
TSA/FA 62.9 67.6 74 77.3
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RLA Annuity Sales
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Annualized New Premiums and Deposits
($ in millions)
1996-1999 CAGR: 10.7%
1996 1997 1998 1999
---- ---- ---- ----
Fixed 419.7 451.2 417.9 404.3
Variable 223.4 311 422.8 468.5
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Strategic Focus
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o Risk management continues as foundation
o Asset gathering leverages market opportunity
o Emphasizing competencies with goal of providing incremental growth
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RLA Summary
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o Grow revenue
- Products, marketing, channel management
o Cross sell
o Education/Training
o Manage expenses
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