Who is Guggenheim?

Guggenheim Fortune CoverIf you don’t know the name Guggenheim (other than maybe the Frank Lloyd Wright Museum in NYC), that’s about to change.
The next edition of Fortune magazine is ready to hit newsstands March 18th with the cover reading:

“The Mysterious $170 Billion Financial Empire…That’s Gone Hollywood…Guggenheim Partners”

I guess purchasing the LA Dodgers and Dick Clark Productions turns some heads!

Having received an advanced copy of the cover article (CLICK HERE to read it), I’m excited to say the least! It’s no secret that my firm has indirectly partnered with Guggenheim through one of their owned insurance entities Security Benefit LifeAdvisors Excel and Innovation Design Group created a couple proprietary and exclusive index annuities that have taken the industry by storm, finishing 2012 as the #1 and #2 selling products in the country! There are a number of factors that made those products a success, a couple different ingredients in the recipe. But the brainpower, yield-producing ability and financial acumen of Guggenheim are a big part!

In the Fortune article, I couple key points I took were:

  • Its secretiveness is partly strategic and partly a reflection of the reserved, stolid personality of Guggenheim’s CEO, Mark Walter. He has focused on managing the rapidly expanding firm, while its more frenetic president, Todd Boehly, has been driving the glitzy new deals. “They want to be the dark horse in the shadows,” says a former employee.
  • One of Guggenheim’s earliest clients was Sammons Enterprises, a Dallas conglomerate that controls several insurers. Today Sammons owns 35% of Guggenheim, whose employees own just under 50%, including stakes of under 10% each for Walter and Boehly. The Guggenheim family retains a small percentage.
    (Quick side note…Sammons Enterprises is behind Midland and North American Life).
  • The core fixed-income accounts run by CIO Scott Minerd — a former competitive bodybuilder in the superheavyweight division — returned 7.3% annually from 1999 through 2012. That stellar performance attracted a flood of assets, especially from insurers. If you tally up the money Guggenheim manages for insurers (including some the firm has now bought), it totals $75 billion today.
  • Guggenheim had enjoyed huge success managing assets for insurers. Eventually Walter and Boehly found themselves with a new opportunity: to buy some underpriced insurers. That also offered a bonus — they could gain even more investing capital. They’d be able to tap the “float,” the billions insurers hold in between receiving premiums and paying out claims. Warren Buffett has become fabulously rich doing this.
  • In 2009, Guggenheim bought Wellmark Community Insurance. A year later it and other investors spent $400 million for control of Security Benefit, and $470 million to buy life insurer EquiTrust in 2011. Last year a Canadian insurer sold its U.S. annuities business to Guggenheim for $800 million. The firm also acquired two companies, Claymore and Rydex, that sell exchange-traded funds.
  • Meanwhile, the firm is still on the hunt for deals. It wants to add insurance assets and bolster its live events business.

If you’re positioning Security Benefit Life, Equitrust Life, North American Life or Midland annuities with clients – this article is a must read! The magazine will become nearly mandatory to keep close-by for quick credibility reference during appointments.

In addition to the Fortune magazine article, Guggenheim President Todd Boehly was recently interviewed on Bloomberg. It provides amazing insight into how Guggenheim thinks and what direction they’re headed. Do the future of your annuity production a favor and watch this:

Boehly_Bloomberg

After seeing the passion, vision and direction of Guggenheim, draw your own conclusions. But I specifically took note when Mr. Boehly spoke about:

  •  3 legs to the Guggenheim stool – Investments, Securities & Insurance Services. Guggenheim is different because they’re focused on 10 year instead of 90 day cycles. Shareholders aren’t asking “what have you done for me lately” allowing them to take advantages of value-priced assets, primed for long-term appreciation.
  • Around 4-minutes he speaks specifically to Security Benefit Life.
  • At 7:30 Mr. Boehly states “(As population increases) finding income over time is becoming harder and harder because yields are being driven out of assets.” What sets them apart is they are long-term capital investors.
  • Premium content & human capital brands will become more valuable in the future.
  • Buying businesses is a great place to earn return, especially in a 2% treasury environment.
  • Just before 14 minutes, Mr. Boehly speaks to one of the hallmarks of Guggenheim’s success being the ability to quickly respond to opportunities. Looking at how the firm was built, it was a federation of business that recently came together as one. And at the end of the day, you’re no better than the talent you attract and surround yourself with.
  • Innovation is critical to what they do.

If you’ve made it this far, read the article and watched the video I’m sure you feel empowered! Go out and do something with it at the client acquisition level!
As always, I’m here to dig deeper on a personal level if it makes sense. Don’t hesitate to reach out my way.

Advise with Passion.
MJN