The TSR Ratio

For Seasoned and Serious Advisors

Introducing a Fast and Effective Way to Assess Your Client’s Annuity
and Life Insurance Company Counterparty Risk

What does TSR stand for and why should I learn more? TSR stands for:
Transparency, Surplus, and Riskier Assets.

Higher Risk Assets +
Wholly Owned Captives/Reinsurance
SURPLUS

It's no secret that private equity firms are using increasingly complex financial engineering to discount liabilities and enhance yields on investment strategies that are much less traditional than in the past. They're doing so with dollars placed in insurance products such as annuities and life insurance. As a conscientious advisor, you need a tool that sheds light on this very real and serious risk.

This critical three-page report compiled by specialized forensic accountant Tom Gober uses each company’s own annual sworn statement to pinpoint troubled reinsurance and excessive risk issues relative to the company’s stated surplus. The TSR ratio is mathematically represented as follows:

Opaque and affiliated reinsurance + riskier assets (defined by Fed Reserve and NAIC)
= TSR Ratio
reported surplus in the company’s most recent annual sworn statement

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Tom Gober

For 35 years Tom has been fighting to protect insurance policyholders. His policyholder protection expertise runs the gamut of insurance operations - primarily insurance company failures to act in good faith, including claims delays or denials, false advertising, and misrepresentation of policy benefits. Most recently, Mr. Gober has exposed a significant increase in false financial reporting to disguise their hazardous financial condition. Mr. Gober serves some of the most respected attorneys in the country helping policyholders find justice.

Why do top financial advisors, insurance agents, CPAs, and lawyers need to listen to Tom Gober, especially now?

Tom is the expert that law enforcement relied on for education and consultation with agents to prove fraud in the AIG criminal case. He is also a former regulator in a state where his last official act was to get his boss’s wealthy friends jailed for insurance fraud. Tom is a champion to the policyholder and a true believer in the benefits of life insurance and annuities.

When insurance companies do it right and are respectful of their policyholders’ money, life insurance and annuities play a vital role in a solid financial plan.

Tom is the go-to expert for top lawyers, the financial media, and law enforcement when life insurance and annuity companies have balance-sheet issues that require expert investigation for fraud and wrongdoing. His work has been done in the courtroom, in the field undercover, and reported widely in the financial media.

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The TSR Ratio Report was the lead story in the Retirement Income Journal

The TSR was created when Tom Gober and Matt Zagula, the founder of the SMART Advisor Network and a known advocate and product developer for mutual and fraternal companies, joined forces to expose troubling risk-shifting and aggressive asset-purchasing patterns as they became more common from stock-owned insurance companies and even more so from private equity-owned insurance companies.

Together, Tom and Matt identified what they believed to be the most significant counterparty risk areas: affiliated and opaque reinsurance and excessive high risk (and illiquid) assets, as defined by the Federal Reserve and NAIC, in comparison to the insurance companies' reported surplus in their annual sworn statements.

What does the TSR ratio have that rating agencies and the regulators don't?

Rating agencies are focused on assetsRating agencies give very little attention to the substance of reinsurance or the excessive buying of affiliated assets in comparison to the insurance company's surplus. Often, the ratio of high-risk assets to the total assets is considered. From a policyholder view, the more important consideration is high-risk assets compared to the financial cushion: the insurance company's stated surplus. Tom says, "Rating agencies have an asset rating heritage in their core DNA."

State insurance regulators focus on reviewing external audit workpapersRegulators review admitted carriers' audit firm reporting. Examiners do desk analysis every three to five years in a face-to-face exam at the insurance company. This limits their review to the data presented by the auditing firm who was hired by the insurance company. Tom, a former regulator, says, "The NAIC permits audit firm reliance in the review process."

Here is what well-known industry professionals and influencers have to say about this important resource:

As a tax lawyer focused on estate planning, the emphasis has to be on the carrier keeping their promise. Too often advisors recommend product(s) solely on the pricing they’ve received through their broker. Our firm policy is simple: if the TSR ratio is over 400 percent, we will not permit the product into the trust without the client and advisor signing an excessive counterparty risk waiver.

Zach Hesselbaum, J.D., LL.M. (Taxation), Chicago, Illinois

Stock companies have created a massive life insurance lapse crisis in older Americans. Our firm specializes in helping these older clients and their families keep the money in the family. The TSR ratio is a huge advancement in helping advisors NOT perpetuate this troubling and financially harmful trend.

Bob Larson, Settlement Masters and The Rushmore Group, Los Angeles, California

I cannot believe what I’ve learned from Tom Gober about the limitations imposed on regulators and how they rely on third-party audit reviews paid for by the carriers. It’s not fair to the regulators. The rating agencies have their focus on assets, not the opaque and affiliated reinsurance trend, which is troubling.

In my forty years at the top of the table, this is the most significant resource I have in choosing the carriers I present to my high-net-worth clients. I won’t write business with a company if their TSR is high, even if their rating is A+, now that I know what is missing in achieving that rating.

Rao Garuda, MDRT Top of the Table advisor, Cleveland, Ohio

As a CPA, I appreciate it when a tool creates clarity. Any CPA will immediately appreciate the approach identifying potentially problematic risk shifting, higher risk, less traditional, and lower liquidity assets relative to the company’s financial cushion—their surplus. I use the TSR when I know a client owns life insurance or an annuity to make sure the coverage promised is not in jeopardy because of unreasonably high counterparty risk.

Hubert McIntosh, CPA, Florida

I learned about the TSR ratio from Kerry Pechter, and now I never miss a company review. I have every other Friday marked out so I am available—what can be more important than making sure the safe money products we offer our clients are truly safe?

Terri Collymore, More Advisory Group, Minnesota

What you get as a TSR Ratio Subscriber

Direct online access to the TSR reports

If the companies you need to know about are not there, simply request their addition, and in fourteen days, their TSR report will be included.

A detailed, three-page report identifying the higher-risk assets and opaque nontraditional reinsurance as a ratio to the reported surplus. REMEMBER: All data comes from the insurance companies’ annual sworn statements. This is a mathematically determined ratio devoid of opinion.

A continuum for carrier comparisons, so subscribers can quickly contrast the difference between two very different companies—from more traditional to less traditional but more financially engineered insurance companies.

Zoom meetings every other Friday introducing new companies in our TSR spotlight and reviewing the best way to explain the TSR to your clients and prospects.

During these sessions, specific concepts are detailed and attention is given to make sure each TSR ratio subscriber is well versed in:

  • Using the ratio to communicate risk to their clients and prospects
  • Determining which carriers to use when life insurance and/or an annuity is an appropriate product for their client

A new carrier is put under the spotlight for an even more intense review by Tom Gober every other Friday at 1:00 p.m. ET.

These sessions help you understand at a deeper, more committed level the absolute importance of selecting and trusting the right counterparties with your clients’ hard-earned money.

Got questions?
Here are the answers to those we are most frequently asked:

YES. Imagine competing with an agent who is recommending a company with a 6000 percent plus TSR ratio. To become insolvent, a company like this would only need a 1.5 percent write-down of their asset values or to have 1.5 percent of their reinsurance go bad—no matter how big they are. It’s all about their cushion: the size of their surplus compared to their less traditional management of risk and assets.

Take a look for yourself at a recent article discussing the license revocation of insolvent reinsurer, Alpha Re. Opaque reinsurance is an enormous problem. You need to be aware of this as markets continue to rise, inflation continues to present higher, less liquid assets, and risk-shifting financial engineering presents a real and immediate issue.

YES. Many of our subscribers are income planners who specialize in annuities. Others are focused on asset management but know their clients buy/own life insurance and annuities for estate and protection purposes. This tool allows both types of advisors to add value to this important conversation, even if they don’t sell life insurance or annuities.
ABSOLUTELY. Many CPAs are performing “audits” on their clients’ insurance-based products. Some find that they need to be more involved as multidisciplinary professionals, referral partners, or on a fee-for-information basis. In all these scenarios, the TSR ratio gives them easy, accessible, turnkey analysis.
Life insurance is a promise to pay well into the future. Carriers engaged in high-risk investing, and opaque, often offshore, captive transactions may experience financial hardships when the benefits are most needed: at your client’s death to pay for taxes, family, or other planning objectives. The TSR ratio helps you gain confidence in the carrier selected and the likelihood that the promise made can be realized based on their financial condition today.
Many of the most problematic issues are the result of guaranteed minimum income benefit (GMIB) riders. These lifetime income guarantees come at a high cost to each carrier’s reserves. These carriers are often the most tempted to use opaque reinsurance and jurisdictional arbitrage to lessen the reserve requirements. This practice leaves less money in reserve to make good on the carrier’s lifetime income promise. So, is it for you? YES!
Yes, but it’s not that simple. The information is costly to access in a workable format. The average insurance company annual sworn statement is between 1,500 and 3,800 pages. Plus, the reinsurance analysis is very complex. Please know, real reinsurance is a very good thing, but when the reinsurance company is affiliated, wholly owned, troubled financially, or a conduit to another captive transaction, it becomes a tool of financial engineering to reduce the reserves held to protect your clients.
NO. Our mission is to help policyholders, and to do that, we want to make this information widely available to professionals—insurance agents, wealth managers, trust officers, lawyers, CPAs, government employees, and law enforcement.

This is almost 1/3 of what frequent customers of Starbucks spend on lattes, muffins, and coffee each year. It’ll renew annually unless you request otherwise.

NO. To keep costs and administrative expenses down, we only offer a yearly subscription, and all purchases are final.
YES, but only if you are an active subscriber and then you will pay a significantly discounted hourly rate. Normal expert witness rates can exceed $600 per hour. As a subscriber, you can book time with Tom at $350 for a fifty-minute meeting. If the carrier to be reviewed with your client is not in the TSR library of carriers, Tom will add that carrier at no additional charge to you.
We know he is, but don’t take our word for it. Here’s what Todd Allen had to say about his experience: “I was in a competitive situation where the other company had what appeared to be a bigger and better benefit, but they also had a 2,000 percent-plus TSR ratio. Matt coordinated a one-on-one meeting for me and my client with Tom Gober—forty minutes into the meeting and the high TSR ratio company was no longer even being considered. Tom is exceptional.” Todd Allen, Retirement Planner, South Carolina
Simply request the carrier and within fourteen days, a full review will be posted. If you want to know about them, there are likely other professionals interested too. As such, we welcome and encourage requests.
NO. Of course, you need to follow all your state rules and regulations, but no, that won’t limit you from knowing who you can trust for your clients. It also doesn’t limit them from learning the truth. Use Tom Gober consultatively, as described above, and he will do the truthful review as the expert witness that he is for the benefit of your clients.

We GUARANTEE You'll Get Value

We offer a 100 percent refund if you are not satisfied. To qualify, you need to have joined and remained on the entire TSR ratio Zoom meeting immediately after your purchase.

If you are not completely satisfied after that Zoom meeting, all you need to do is contact Lesli.

Email: lesli@smartadvisornetwork.com
Direct Cell: (814) 624-9767 — Yes, this is her real and direct cell number!

Are you a seasoned and serious advisor who wants a fast and effective way to assess your clients’ annuity and life insurance company counterparty risk?

Still not convinced?
Join us for the next TSR Ratio call with Forensic Accountant Tom Gober

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