American Savings Life Insurance Company (ASLIC or American Savings) is an Arizona-based life insurance company that offers life insurance and annuity products within Arizona and Utah. Their trademarked "Not So Hard Money" real estate mortgage loans are available in Arizona, Texas, Colorado, New Mexico and Utah.
History and Business Model
American Savings Life Insurance Company, or ASLIC, was founded in 1954 by Frihoff N. Allen, a long-time life insurance salesman. He believed there were two main problems with many large life insurance companies: (1) they had bloated or unnecessary expenses and (2) they had many "hands in the pie." These two factors resulted in the benefits paid out of each policy sale becoming watered down for the customer. Allen became determined to create a life insurance company with a business model of operating very lean, without layers of management and expensive overhead, and then passing those savings on to the customer through better products. Today, current management of ASLIC maintains this same business model. Evidence of this is shown in both ASLIC's financial statements through low operating expenses and high profit margins as well as the current life insurance and annuity products being sold today.
Investment Strategy
Since 1954, ASLIC's investment strategy has remained the same by investing the majority of the company assets in real estate loans. The majority of the initial capital Frihoff N. Allen invested to start ASLIC was real estate mortgage loans he had personally made. His personal experience in real estate mortgages developed into the core of ASLIC's investment strategy. Due to the company's profitable experience with this investment model, ASLIC continues to provide real estate loans as its primary investment class, with typically two-thirds of total assets invested in real estate loans.
The real estate loans that ASLIC invests in are not the typical loans in which most life insurer's choose to invest. They are not mortgage backed securities, nor are they originated by a third party mortgage company. They are not conforming loans with low interest rates that are 80 to 100 percent of the property value like many other Banks and Lenders. Instead, ASLIC lends its money in a traditional fashion. ASLIC originates its loans in-house through its lending arm, American Life Financial (or ALF). An ASLIC employee personally inspects every property ASLIC loans on. It personally meets every borrower and verifies the borrower's ability to make the loan payments. Most importantly, ASLIC only loans, on average, fifty-five percent of a conservative current market value for the property. By only loaning about half of a property's value, ASLIC requires the borrower to have substantial equity in the property. As a result, ASLIC believes this is the reason for their time-proven low foreclosure rates. Furthermore, when ASLIC incurs a foreclosure, it usually makes a profit by being able to sell the property for more than what was owed resulting in positive financial gains.
This niche real estate loan product that American Savings has been making for several decades has proven to be a very safe investment vehicle. These loans, which ASLIC has trademarked as "Not So Hard Money" are also very profitable, providing the Company with higher interest rates than conforming commercial real estate loans. With ASLIC's 50+ year history of making these niche loans and the low foreclosure rate they have had, it has proven to be a very favorable risk-adjusted rate of return.
As of 2016, ASLIC is able to charge between 6.99% and 12% interest on their "Not So Hard Money" loans because their loans are considered non-conforming loans. Typically, either the real estate securing the loan or the borrower (or both) are unable to qualify for a conforming loan with a bank. Often American Savings' borrowers are business persons who have profitable business but do not fit the conforming loan criteria. ASLIC's "Not So Hard Money" loans are designed to fill the niche between conforming bank loans and private money or hard money loans. ASLIC fills the niche by charging lower interest rates, lower loan origination costs, and offering longer loan terms than typical hard money loans.
Products
Grand Slam Life Insurance Plan
American Savings specializes in both life insurance and annuities products. It also offers commercial real estate loans through its lending arm, American Life Financial.
Grand Slam Calculator
American Savings provides a calculator on their website to assist in calculating various investment options. This calculator shows projected values for any age and any premium.
Dividends
The Grand Slam Annuity product provides three options for annual dividends to be paid out: have the dividends paid directly to the policy holder, have them applied to the premium, or have it applied to increase the policy's coverage.
B.E.S.T. Income Annuity
Your monthly payments are guaranteed for the rest of your life - no matter how long you live. Joint Annuity payments are guaranteed for as long as the last surviving spouse lives. Payments are guaranteed to never decrease - regardless of what the markets do.
Payment options include Payments for Life (Single or Joint Life), Payments for Life (Single or Joint) with Return of Premium, Period Certain, Payments for Life (Single or Joint) with Period Certain.
Premier Series II Fixed Deferred Annuity Product
This annuity has a fixed interest rate the first year, then the rate is set annually thereafter; however, there is a "Bail-Out Provision" that kicks in if the interest rate is ever lower than the "Bail Out Interest Rate" where you have the right to cancel the annuity without any penalty if that occurs. Otherwise, there are fees for early withdrawals, depending on which annuity you select.
There are four types of Premier Series II Fixed Deferred Annuity products: Premier Series 9 with a 9-year surrender charge, the Premier Series 7 with a 7-year surrender charge, the Premier Series 5 with a 5-year surrender charge, and the Premier Series 3 with a 3-year surrender charge. The interest rates for the different products also vary.
The Youth Life Plan
The Youth Life Plan is a product for insured ages 6 months to 24 years old at the time of application. It provides $10,000 (or $20,000) of permanent whole life insurance for an annual premium of only $25 (or $50) while the insured is 24 years old or less. At age 25, the premium increases to $90 per year but the entire $65 increase becomes Cash Value. So if the policy is ever cancelled later on, every penny paid over the low childhood rate of $25 per year will be refunded to the owner.
Current Performance
American Savings Life Insurance Company reports its financial condition and performance using two methods of accounting.
To its shareholders it reports annual performance through its Annual Report to Shareholders, which figures are unaudited and based on Generally Accepted Accounting Principles (GAAP).
To its regulators, it reports annual performance through its audited financial statements, which are based on Standard Statutory Accounting Principles (SSAP). These differ somewhat from the GAAP statements since these statements have several differences in how assets, liabilities, income and expenses are calculated.
BBB Rating
American Savings has an A+ BBB Rating, and has been a BBB Accredited business since October 2008.
References
External links
- American Savings Life Insurance Company's corporate Web site
- American Life Financial's corporate Web site
- Youth Plan online application
