In the 1960s and 70s the nationâ€™s largest keyboard company Â Baldwin Piano & Organ Company began expanding into banking and insurance eventually creating a large conglomerate of financial services companies.Â In 1977 Baldwin merged with United Corp., an investment company, and became Baldwin-United Corp.
Unfortunately for buyers, these contracts proved to be unsustainable and directly contributed to the bankruptcy of Baldwin-United in 1983.Â In fact, the $9 billion in liabilities of Baldwin-United exceeded the combined debt of the four previous largest bankruptcies up to that point.Â
In the 1983 the states of Indiana and Arkansas took over the majority of Baldwin-Unitedâ€™s assets and began the long process of rehabilitating the two insurance carriers and distributing assets to policyholders.
According to a recent Wall Street Journal article companies
â€śbetting they can wring more profit from annuity contractsâ€ť than traditional insurance companies.
Another article in Bloomberg Business Week quotes Benjamin Lawsky, New York State superintendent of financial services
Â â€śTheir focus is on maximizing their immediate financial returns, rather than ensuring that promised retirement benefits are there at the end of the day for policyholders,â€ť
Important questions to ask about insurance companies you are considering doing business with.
- Are they controlled by outside entities that donâ€™t have an insurance background or experience?
- Do they offer products with features and rates that are far above what the competition is offering?
Â The lessons from the past should be kept in mind.
ProperlyÂ managed insurance companies are among the safest places for your retirement dollars even in the example of Baldwin-United the state guaranty associations made the policyholders whole.Â This process is time consuming so it wise to research companies you are considering.