In Practice January 30, 2008

Annuities in 401(k) Plans Increasingly Accepted

Annuities in defined contribution plans are gaining momentum as aging baby boomers seek to create guaranteed retirement income streams, according to a report from the Financial Research Corporation (FRC).
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The report, “Guaranteed Annuities in Defined Contribution Plans: Current Products and Future Prospects,” reveals key trends that will determine the evolution and success of annuities in DC plans, provides in-depth product profiles for current plan offerings for Genworth ClearCourse, Hartford Lifetime Income, MetLife Personal Pension Builder, and Prudential IncomeFlex, and defines four steps manufacturers should take to overcome adoption challenges, FRC said.

Luis Fleites, Vice President and Director of Retirement Markets at FRC said the first step to facilitating a more widespread acceptance of annuities within 401(k) products is to amend the negative perception of annuities through communication and education at the platform level. The communication needs to be adapted so participants are aware that they are purchasing an income option, Fleites said in a press release.

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The report findings indicate that these communication and educational strategies vary from firm to firm and provide examples.

FRC said it expects to see strategies evolve as manufacturers and recordkeepers identify successful marketing strategies for both plan sponsors and participants. Now that a framework for these products has been established, new entrants in the marketplace should be able to capitalize on the progress already achieved, FRC said.

The company also said it expects the emergence of guaranteed retirement income as an asset class within plan offerings.

For more information on the FRC research report, contact Trisha Langlois at FRC at (617) 824-1204 or via e-mail at Trisha.Langlois@frcnet.com.

Deals & People January 30, 2008

MMC Turns to Duperreault as new CEO

Marsh&McLennan Companies, Inc. (MMC), whose insurance brokerage unit has undergone management changes in recent months, on Wednesday tapped Brian Duperreault as MMC’s new president and chief executive officer.
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According to a company announcement, the 60-year-old Duperreault’s new assignment is effective immediately. He succeeds Michael G. Cherkasky who the company said was replaced amid disappointing financial results (See MMC Shuffles out CEO).

“Throughout his career, including 10 years as a CEO, Brian Duperreault has proven his ability to produce results and create shareholder value,” said Stephen R. Hardis, Chairman of MMC’s Board of Directors, in the announcement.

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Duperreault served as CEO of ACE Limited, a Bermuda-based insurer, from 1994 to 2004. He then served as chairman of the board from 2004 to 2007.

Prior to ACE, Duperreault was with American International Group for more than 20 years, holding numerous positions and eventually rising to become executive vice president of AIG Foreign General Insurance and chairman and chief executive of AIG’s American International Underwriters (AIU), which comprises all of AIG’s non-U.S. commercial business.

The December 21, 2007, announcement that Cherkasky would resign when MMC found a new CEO was the second major management change in less than four months. The board fired Brian Storms in September as chairman and CEO of brokerage unit Marsh Inc. for what MMC viewed as poor execution of Marsh’s long-term strategy (See CEO Storms is Out at Marsh).

Earlier in December, Marsh tapped Daniel S. Glaser, managing director of AIG Europe (U.K.) Ltd., regional president of American International Underwriters’ U.K./Ireland division, and a former Marsh employee, as its head (See Daniel Glaser to be New Marsh CEO).

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