Security Benefit sees record sales

After taking a beating in the credit crisis of the Great Recession, Security Benefit is adding workers and posting record profits.The company announced earlier this month that it had paid off a large loan that financed an ill-fated acquisition in 2008. Security Benefit CEO Michael Kiley sat down with The Topeka Capital-Journal on Monday to discuss the company’s emergence from financial trouble in the recession as a larger player in the retirement savings market.

In 2008, Security Benefit purchased Rydex Investment Co. for about $700 million. Credit markets were tight at the beginning of the recession, so management at the time decided to dip into their general account, Kiley said. At the same time, the company began seeing losses from the bundled mortgages that had been sold as safe investments but turned out to be anything but when the parking sensor.

“Either one of those things would have been painful,” said Kiley, who joined Guggenheim Partners in 2009 when it was working to acquire Security Benefit. He was named CEO in August 2011.

A group of investors led by Guggenheim provided a needed $340 million cash infusion in 2010 when it purchased Security Benefit, and the company also reduced its debt by selling Rydex, Kiley said. Still, a loan the size of the Rydex one could take up to 30 years to pay off, but Security Benefit and Guggenheim wanted to pay it off as soon as possible to close that chapter of the company’s history, he said.“I think it was important symbolically to the company,” he said.

The first step after the investment group acquired Security Benefit was to reassure policyholders that Security Benefit “(was) here to stay,” Kiley said. Then came strengthening the company by introducing new financial products to serve a wider range of people trying to accumulate savings and arrange for steady retirement income, he said, broadening its distribution network beyond its traditional focus on investment options for the education sector.“There’s a very clear sequence that had to be done,” he said.

The new products paid off as Security Benefit’s sales are expected to reach $6 billion this year, up from $1 billion in 2010, Kiley said, and ranked in the top five companies for sales of three or four different kinds of retirement savings products. Its rating with Standard & Poor’s has risen to an A-.“Right now, we have the strongest capital position in our history,” Kiley said. “We have record profits and record sales.”

In a January speech to the Greater Topeka Chamber of Commerce, Kiley predicted Security Benefit would reach about 800 employees this year, up from 550 in 2010. It had 792 as of early August and that total would likely be higher than anticipated by the end of the year because the company has hired new employees at a rate of eight or nine per month, he said.

The new employees work in a variety of departments, and some do administrative work for Guggenheim, Kiley said. He pointed to infrastructure investments to accommodate the increased number of employees as a sign the company was committed both to hiring for the long-term and staying in Topeka.

Two-dozen curious environmentalists, taking a bike tour of something described as the Harris Creek Watershed, parking guidance, and pull up in front of the Patterson Park branch of the Enoch Pratt Free Library. Their tires come to a rest over several large, metal stormwater grates. They’ve already toured Real Food Farm on the grounds of Lake Clifton High School, where they were told the watershed’s headwaters begin. They’ve toured Duncan Street’s Miracle Farm, built on a vacant block in East Baltimore. They’ve ridden south past the Baltimore Recycling Center, Collington Square Park, the Reggie Lewis Memorial Basketball Courts, and bustling but trash-strewn Frank C. Bocek Park.

“That’s Harris Creek,” deadpans Leanna Wetmore, program coordinator with Banner Neighborhoods and a tour volunteer with organizer Ben Peterson. Wetmore notes the creek now runs entirely beneath the city, long ago co-opted into the massive underground storm-water system. “The water’s visible if you look down there,” Wetmore adds as a few brave souls take a peek. “When there’s a really big storm, the drains back up and flood this whole area. It can move cars parked here.”

Peterson explains to the group—still slightly stunned by the odorous discovery of Harris Creek—that the city’s century-old sewage pipes (some made of wood) run parallel to equally antiquated stormwater pipes. When the outdated sewage lines inevitably bust, raw waste flows into the stormwater lines, entering the harbor untreated. And when thundershowers just as inevitably overwhelm the stormwater system, trash and chemical pollutants from streets, rooftops, and pavement get whisked downstream.

Of course, it’s not just buried Harris Creek that is regularly debased, but the Jones Falls, Gwynns Falls, Middle Branch and Patapsco River, among other harbor tributaries. At the tour’s end, where Harris Creek empties into the harbor, not far from Canton’s Waterfront Park, where residents once swam and crabbed and local clergy dunked their flock in full-immersion baptisms, frustrated activist Raymond Bahr calls healing the harbor, “mission impossible.”

“Just think, to not only stand at the edge of the harbor but to dangle your feet in the water and jump in,” Waterfront Partnership President Laurie Schwartz suggested when the Healthy Harbor initiative and “swimmable, fishable” goal was announced in 2009. “Downtown Chicago has a beach . . . why can’t we?” It’s a good question, but only last year the Maryland Department of the Environment shot down an effort by the Baltimore Rowing Club to host a triathlon.

At the same time, other cities have reclaimed their iconic waterways, at least to an extent. The Boston Harbor is now referred to as a “jewel” by the EPA decades after The Standells mocked the city’s harbor in their 1966 hit “Dirty Water” and the first George Bush blamed Michael Dukakis for dumping “500 million gallons of barely treated sewage” daily into the harbor during the 1988 presidential campaign. Striped bass and shellfish can be caught in Boston Harbor today, and recreational swimming has returned as well. New York City, Philadelphia, and Washington, D.C., all hold annual swimming events in the tested waters of the Hudson, the Schuylkill, and the Potomac.

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