New York Life Making Move Into Reverse Mortgages

MetLife (NYSE:MET) and Genworth (NYSE:GNW) may not be the only insurance powerhouses in the reverse mortgage business in 2012.

While there have been rumors floating around for the last few months that New York Life, one of the largest mutual life insurance companies in the United States, was looking to enter the space, a new job opening confirms the company plans to enter the reverse mortgage business.

According to the job description, the company is looking for someone to oversee all financial reporting and business planning elements of its Home Equity Income Solutions (HEIS) business line. New York Life describes its HEIS business as a “proprietary approach to the reverse mortgage market.”

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During the National Reverse Mortgage Lenders Association annual conference in Boston earlier this year, New York Life discussed offering some type of proprietary reverse mortgage product during meetings with several key industry leaders according to RMD sources. Whether or not HEIS will include a proprietary product isn’t yet known.

New York Life has several relationships with AARP to offer life insurance and lifetime income products to its members and a source who spoke with the company in Boston said it’s looking at doing the same thing with reverse mortgages.

It’s not clear when the company will launch the new business line and the company declined to comment specifically on its reverse mortgage plans.

“The company is always looking at new business opportunities,” said a company spokesman in an email to RMD. “However, it is company policy not to comment on rumors or speculation. Our practice is that when we have news to announce we do so promptly.”

While the company might call this speculation, it’s the first public confirmation from one of the largest mutual life insurance companies that it is gearing up to possibly enter the reverse mortgage business.

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  • There are three areas where it is very difficult for proprietary reverse mortgages to compete with HECMs:  1) growing principal limit, 2) tenure payouts, and 3) no need for profits or even covering all administrative costs.  The greatest disadvantages HECMs face are:  1) making up MMI Fund losses from outstanding HECMs through ever higher ongoing MIP annual rate and lower initial principal limit factors and 2) the new push to pay some tax breaks through MIP insurance.
     
    It still seems slightly early for insurance companies to return to our industry.  If New York Life (or NYL) is actually building its infrastructure through hiring as indicated in the article, perhaps NYL is looking for rosier days sooner in the higher valued home market than others deem warranted.  This is an interesting development.

  • There are three areas where it is very difficult for proprietary reverse mortgages to compete with HECMs:  1) growing principal limit, 2) tenure payouts, and 3) no need for profits or even covering all administrative costs.  The greatest disadvantages HECMs face are:  1) making up MMI Fund losses from outstanding HECMs through ever higher ongoing MIP annual rate and lower initial principal limit factors and 2) the new push to pay some tax breaks through MIP insurance.
     
    It still seems slightly early for insurance companies to return to our industry.  If New York Life (or NYL) is actually building its infrastructure through hiring as indicated in the article, perhaps NYL is looking for rosier days sooner in the higher valued home market than others deem warranted.  This is an interesting development.

  • There are three areas where it is very difficult for proprietary reverse mortgages to compete with HECMs:  1) growing principal limit, 2) tenure payouts, and 3) no need for profits or even covering all administrative costs.  The greatest disadvantages HECMs face are:  1) making up MMI Fund losses from outstanding HECMs through ever higher ongoing MIP annual rate and lower initial principal limit factors and 2) the new push to pay some tax breaks through MIP insurance.
     
    It still seems slightly early for insurance companies to return to our industry.  If New York Life (or NYL) is actually building its infrastructure through hiring as indicated in the article, perhaps NYL is looking for rosier days sooner in the higher valued home market than others deem warranted.  This is an interesting development.

  • There are three areas where it is very difficult for proprietary reverse mortgages to compete with HECMs:  1) growing principal limit, 2) tenure payouts, and 3) no need for profits or even covering all administrative costs.  The greatest disadvantages HECMs face are:  1) making up MMI Fund losses from outstanding HECMs through ever higher ongoing MIP annual rate and lower initial principal limit factors and 2) the new push to pay some tax breaks through MIP insurance.
     
    It still seems slightly early for insurance companies to return to our industry.  If New York Life (or NYL) is actually building its infrastructure through hiring as indicated in the article, perhaps NYL is looking for rosier days sooner in the higher valued home market than others deem warranted.  This is an interesting development.

  • There are three areas where it is very difficult for proprietary reverse mortgages to compete with HECMs:  1) growing principal limit, 2) tenure payouts, and 3) no need for profits or even covering all administrative costs.  The greatest disadvantages HECMs face are:  1) making up MMI Fund losses from outstanding HECMs through ever higher ongoing MIP annual rate and lower initial principal limit factors and 2) the new push to pay some tax breaks through MIP insurance.
     
    It still seems slightly early for insurance companies to return to our industry.  If New York Life (or NYL) is actually building its infrastructure through hiring as indicated in the article, perhaps NYL is looking for rosier days sooner in the higher valued home market than others deem warranted.  This is an interesting development.

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