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In the 1960s and 70s the nation’s largest keyboard company  Baldwin Piano & Organ Company began expanding into banking and insurance eventually creating a large conglomerate of financial services companies.  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.  In fact, the $9 billion in liabilities of Baldwin-United exceeded the combined debt of the four previous largest bankruptcies up to that point. 

In the 1983 the states of Indiana and Arkansas took over the majority of Baldwin-United’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

“betting they can wring more profit from annuity contracts” than traditional insurance companies.

Another article in Bloomberg Business Week states these money managers are

 “betting they can wring more profit from annuity contracts” than traditional insurance companies.

Important questions to ask about insurance companies you are considering doing business with.

 The lessons from the past should be kept in mind.

Properly 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.  This process is time consuming so it wise to research companies you are considering.

For help you may ask questions in the comments or contact me privately here: Tim Barton Chartered Financial Consultant

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One Response to What Do Pianos Have to Do With Annuities?

  1. J Lockwood on November 26, 2012 at 1:01 pm

    Great article about annuity carriers and the importance of knowing the carrier you deal with. In fact, this could be more important than the ratings in some cases. Today, the annuity industry has seen more hedge funds and private equity firms buying up annuity carriers.

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