Smiling, John showed how Wonderful Life had been executing better than othe companies with similar product mixes.? Internally, he knew it was a weak argument.? In the back of his mind he could hear, “Why didn’t you enter other lines of business?”? He pointed out the relatively low cost nature of the dedicated field force, and how surrenders were lower and mortality ratios as well.

As he talked about industry conditions, he looked around the room.? Goldsmith, Farell, and Blitztein were giving him full attention, but Baldwin and Bullard looked bored.? Brent Fowler sat there, playing with his Blackberry.

He thought to himself, “Okay, time to take the bull by the horns,” and then said, “Peter prepared these final exhibits for me at my request.? If you don’t like what I have to say here, blame me, not Peter.”? He looked at Peter, who gave a small smile, then Baldwin and Bullard, who looked vaguely puzzled.

“In early 2007, we began making our asset portfolio more conservative.? We felt we were not getting compensated for taking risks on lower investment grade bonds, junk bonds, and even commercial mortgages.? We further emphasized industrial and utility bonds over financials, difficult as that was to do.? We accelerated that process in early 2008.? This cost us yield, be we aimed for safety in what we thought was a bad environment.? We do not think it is time to begin taking risk in a major way now, but we do believe we are ready to make more money when the bond markets reliquefy.? We have begun edging back into junk bonds and low investment grade corporates.”

“The bad news from this is our spreads on investments were pinched to the point where we will not be able to pay as big of a dividend in 2009 that we paid in 2008.? Nonetheless, we believe we are better positioned for long term growth.”

As he sat down, he prayed.? “That was my best shot,” he thought.? Baldwin simply said, “And now you, Fowler, finish up.”

Brent Fowler took a very different tack from John Davidson.? He pointed to the considerable growth in premiums — indeed, he was near the top in the industry in percentage terms.? He talked about new products that were gaining market share, and the considerable profits they were gaining from new and existing business.? Fowler concluded by saying, “There are always opportunities in Life Insurance and Annuity marketing if one simply opens his eyes and grabs hold of them.”

John noticed that much of the growth came from new variable annuity products with secondary guarantees, and EIAs, but aside from that he thought, “I’m sunk.? His profits are up and mine are down.? He’s the successful risk-taker, and I’m just a stodgy loser.”? He waited to hear what would come next from Baldwin and Bullard.