Transforming Retirement Savings. May 2016

Transcription

1 Transforming Retirement Savings May 2016

2 Problem: The State of U.S. Retirement Savings = Dismal Headlines sound the alarm that saving for retirement in the United States is getting harder 75% of Americans arrive at retirement with less than $28,000 in part due to divorce 31% of America s full-time employed work force has no retirement savings or pension plan Over a lifetime, hidden fees in 401ks can cost a median-income two-earner family nearly nearly one-third of their investment returns, and divorce will blindside many, resulting in an average loss of three-quarters of their total net worth. Social Security will run a cumulative cash deficit of $2.8 trillion between now & 2034

3 Some employers are turning to Cash Balance (Defined Benefit) Plans but they re People want alternatives to the risk and limitations embedded in defined contribution plans (401ks/IRAs) expensive and hard to set up. The insurance industry sells billions of dollars of guaranteed payment products but they require huge upfront investments and 75+% of consumers don t understand them.

4 Solution #1 Marriage Assurance What it is Why it makes sense A new-to-the-world method of wealth creation & preservation for married individuals Almost half of the weddings which take place in the United States each year will fail. Most within the first 8 years. Life insurance based, endowment-like product Divorce reduces the average person's wealth by 77%. Available online in just a few clicks 44% of women go below the poverty line following divorce. Starts at just $15 per month premium Deducted from monthly paycheck, credit card or bank The percentage of married persons who will reach their 25th anniversary is only 33%. Moreover, second and third marriages have a fewer than 1 out of 3 success rate. Guaranteed benefit from $10K to $2MM (chosen by the consumer) after 25 years Includes divorce insurance coverage that grows over time U.S. taxpayers foot an annual bill of over $112 BILLION dollars in Federal, State and Local taxes to support fragmented families every year. Equivalent investment return for insured is 5.7% compounded over 25 years

5 Market Acceptance Marriage Assurance Insurance agents, financial planners and wealth advisors love this product LOIs from agencies across the US representing more than 54,000 agents Marriage Insurance Being Pitched in U.S., Canada CBC Posted: 4/30/2012 PM Updated: 4/30/12 2:24 PM So do large scale Employee Benefits providers like Mercer, Aon and Watson Wyatt QUICK POLL Would you buy marriage insurance? Yes, I think it s a great idea 44.12% So does our target audience! No, I think it s ridiculous 24.51% Seven market acceptance studies consistently showing 40+% responding I would definitely buy it, plus 20-40% saying maybe, if I knew more about it. Maybe, depending on the price 31.37%

6 Solution #2 Personal Portable Pension Plan What it is The easiest way to save for retirement a simple online retirement savings product tied to the consumer, not a company, with a great user experience purchased almost instantly with complete clarity to the consumer. How it works Available online in just a few clicks $25 minimum buy in / Patent Pending Deducted from monthly paycheck, credit card or bank Guaranteed lump sum or fixed income at desired retirement age Complexity free, single product focus, no confusing riders Captures some of the market gains but none of the market losses

7 Market Acceptance Personal Portable Pension Plan Example from one of 3 company initiated independent studies Question 8: If I could design the ideal retirement savings vehicle for me, it would have (check all that apply): Survey Monkey poll of more than 1000 adults age choices of unique characteristics of 401ks, IRA, traditional annuities and the 4P. Who chose the exact qualities of a 4P? 65.06% chose at least 2 of the characteristics that define a 4P 33.73% chose 4 or more qualities that define a 4P 20.48% of respondents chose five of five of the choices that described only those INDUSTRY PUNDITS LOVE OUR That market [25-55 age group] is wide open. If you guys capture the holy trinity of online value [cost, convenience and transparency], you will be uber successful. characteristics of a 4P Conclusion, given the choice, fully one-fifth of the adult population under 50, employed full time, would call a 4P an ideal retirement savings vehicle for me Allianz Study majority prefers safety over return 24% Prefer 8% RETURN with possibility of losing value/vulnerable to market downturn Jamie Cox, Managing Partner, Harris Financial Group Sought after annuity industry authority, recognized by Barron's, Registered Rep Magazine and Virginia Business Journal as one of the top independent financial advisors in the country. 76% Prefer 4% RETURN that is guaranteed not to lose value

8 Who is the Target Market Who is the Target Market Total # of Americans with Full-Time Jobs = Million* 30 million With NO ACCESS to company sponsored retirement plans 59 million With access and actively participating in their retirement plans 58.2 million Already married with no prenuptial agreement PRIMARY TARGET 11 million With access but who choose NOT to participate SECONDARY TARGET 23.3 million Previously divorced one or more times 44 million Concerned parents of soon-to-be marrieds Plus another 22+ million contract, temporary and part-time workers with no access to retirement plans * 70 million with access to company sponsored retirement plans many looking for safe alternatives

9

10 Unique and defensible How do our products differ from others out there? No other company offers anything remotely similar to Marriage Assurance No insurance company offers annuities direct-to-consumers online. Only one online aggregator exists (launched April 2016). Will help us sell! We ll have a better (guaranteed) ROI. 5.7% for MA; Up to 9% for 4P No other Defined Benefit Plans can directly compete with 401k plans with such low cost entry points. $15/month for MA; $25/week for 4P No other guaranteed insurance products are designed with living benefits specifically for people who are just starting their careers and/or their retirement savings plans. Barriers to entry? IP Our 4P is patent pending Legacy systems D2C is a huge barrier to entry to existing life insurers, especially in the annuity market. We re as much a pioneer in this regard as Esurance was to the auto insurance segment in Reputational Risk Large insurers are not-so-secretly worried about associating their brand with what they consider a controversial product. Perception of adverse selection risk 100% of actuaries initially think a near 50% divorce rate equals unprofitability. After stress testing our model 100% admit they were wrong.

11 PILOT STATES Pilot program geography and financial data Alaska Hawaii EXPANSION IN 1 ST YEAR EXPANSION BY 3 rd YEAR $000,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Revenue $7.53 $21.28 $50.84 $ $ $ $ Reserves $6.04 $25.05 $66.25 $ $ $ $1, Expenses $3.46 $6.17 $11.53 $22.08 $38.31 $59.82 $87.91 Net Income $0.25 $0.93 $3.55 $9.88 $22.13 $41.22 $68.99

12 The Team Management Team Key Board Members John Logan Founder & CEO CEO, SafeGuard Guaranty Corporation 33 years of New Product Dev, 14 in the insurance industry 5 successful startups in 4 distinctly different industries Kenneth Fries EVP Distribution & Strategic Alliances 30+ years of C level experience in insurance VP, MassMutual, Annuities Division VP, The Hartford, Agency Strategy, ebusiness & Technology Chad Masland Director 30+ years of C level life insurance & annuities experience President, Citicorp International Insurance SVP, Citigroup (Marketing & Product Development) VP, National Life of Vermont Thomas Mayo CFO 30+ years of C level experience in banking and insurance VP, The First Bank of Chicago Co-founder, Swift Insurance Brokers CEO/CFO, CMA Insurance Holdings Sebastian Pistritto, VP of Marketing 17+ years of C level multi-channel marketing experience in both digital & non-digital environments VP of Digital Marketing Strategy for Harte Hanks Former life insurance agent Richard Hecker Director CEO, Traction and Scale LLC Co-founder, Kitara Media, public rollup in digital advertising Co-founder, insparq, leading social commerce company

13 The Opportunity Raising $2,500,000 Preferred Shares Use of Funds $1,500,000 = Required Reserves and Surplus to create the insurance underwriting entity Estimated valuation EOY 1 = $12,052,948 $1,000,000 = Operating Expenses EOY 7 = $1,571,532,570

14 Thank you John Logan, CEO SafeGuard Guaranty Corporation Direct: