Beyond Lutherans: Thrivent Financial looks to expand

Beyond Lutherans: Thrivent Financial looks to expand

Steve’s breakdown: Here’s an interesting opportunity. A 110 year old faith-based financial services company wants to breakout. Being a Lutheran would probably help to win this account. But you’ll also have to be a staunch capitalist too. Very interesting!!

Looking for growth, Thrivent Financial for Lutherans is considering expanding to markets beyond the nation’s 18 million Lutherans.

The fraternal benefit organization and provider of such financial products as life insurance, annuities and mutual funds has been catering almost entirely to Lutherans and institutions affiliated with Lutherans since it was founded 110 years ago. But it might be time to offer membership outside of its one Christian denomination – a move that would take approval by the group’s membership, said Chief Executive Brad Hewitt.

“It’s like 99% Lutheran right now,” Hewitt said. “We’re in the process of looking at that and saying, ‘Does it still make sense for the next 100 years?’ ”

Hewitt said Thrivent, which was formed by the 2002 merger of Aid Association for Lutherans in Appleton and Lutheran Brotherhood of Minneapolis, has to be careful about how widely it would open membership because its faith-based nature is one of the things that makes it special. Most members believe “their faith and finances are connected,” he said.

“I don’t think there’s a big risk in going to a broader market, in one way,” Hewitt said. “On the other hand, it is one of those things we have to be thoughtful about and do it in a right way, because you don’t want to lose the affinity. That’s part of the value.”

Hewitt said having churchgoing Lutherans as its clear market is “a great blessing” for the organization.

“We know exactly who our customers are, and we know exactly where they are one day a week,” Hewitt said. “We know where to find them. But we’re probably at the stage where we have the market share that we’re likely to get, and if we can’t keep growing, we would likely want to expand. I don’t think it’s a ‘need to.’ I think it’s a ‘want to.’ ”

The most likely targets for expansion would be other churches, schools and even causes, such as certain nonprofit groups that provide social services.

“I think we probably would expand to a broader Christian or some subset of that,” Hewitt said. “We’re in the process of starting that discovery right now.”

Hewitt said Thrivent has polled its membership informally about the idea of expanding beyond Lutherans, and about two-thirds have said they’d be in favor of it.

The expansion would require changes in Thrivent’s articles of incorporation, so it’s not imminent.

“We would have to run a campaign and we would have to ask them,” Hewitt said.

With a membership of about 2.5 million, Thrivent already is the largest fraternal benefit society in the United States. The organization has reported three consecutive years of growth in sales, revenue, assets under management and total adjusted surplus, which is a measure of an insurer’s financial strength.

At the end of 2011, it had $170.2 billion of life insurance protection in force, and paid out $310 million in dividends. Its adjusted surplus – excess funds above the reserves required to provide for future insurance benefits – stood at $5.4 billion.

It also reported giving $175.5 million in direct support to charitable causes, schools, congregations and needy individuals, and awarded $15.1 million in grants to Lutheran institutions nationwide and nonprofits in the Minneapolis-St. Paul and Fox Cities areas.

Although the headquarters of Thrivent located in Minneapolis after the merger 10 years ago, most of its operations are in Appleton. That includes information technology, claims, underwriting, a call center and some of its investment managers. Marketing and accounting are split between the two locations. Overall, Thrivent has about 3,000 corporate employees, the majority of them in Appleton.

Thrivent hires and trains its own field force of representatives to sell financial products, and stresses bringing on agents who believe in the faith-and-finances theme of the organization. That makes it more difficult to find people and limits growth, Hewitt said.

“We’ve been growing mainly by growing productivity of our existing folks, and we would love to grow even more if we could,” Hewitt said. “But we’re not willing to grow at the expense of losing that trustworthy brand, and so we pay a lot of attention to getting the right kind of character and competence in our sales folks and all of our field leaders.”

Asked whether Thrivent Financial for Lutherans would need to change its name if it expands the market, Hewitt said, “We haven’t figured that out yet.” But he implied that issue might take care of itself.

“The reality is, the practical thing is, people call us ‘Thrivent,’ ” he said.


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