NY Life CEO on the economic recovery, retirement planning and the company's initiative to help healthcare workers

Ted Mathas - New York Life CEO joins Yahoo Finance's On The Move to discuss the economic outlook amid the pandemic.

Video Transcript

BEN SHAPIRO: Welcome back to "On the Move." The largest mutual life insurance company in the country is New York Life. It's the third largest insurance company if you include those which are privately traded. It is a private company, however, and there's so much to talk about when you're the CEO of a company with more than $600 billion of assets under management. So let's bring in Ted Mathas. He's New York Life CEO. He's joining us here in New York City, and it's good to have you here, Ted.

TED MATHAS: Hey, good morning, Adam. How are you doing?

ADAM SHAPIRO: I'm very good. I want to talk to you about several things. Got to point out to our viewers that, just in the form of disclosure, that I do have a New York Life product as part of my retirement planning. But that said, when we look at this economy, you've got 12,000 people you lead, and one of the things you like to say to your team, your staff is to be confident and be humble. And in a discussion I had with you before this interview, you pointed out that you did a stress test using the 1918 pandemic. This wasn't, you said prescient, it's that you got lucky when you asked to do that before this pandemic hit. Explain to me how that plays in business, especially when you run a $600 billion plus company.

TED MATHAS: Sure. So New York Life has 175 years of history in our DNA. And in that period of time, we've experienced pandemics, yellow fevers, great depressions, great recessions, and we believe that we can learn from those experiences. But one of the things we learn from that is you can't predict the next crisis, and you cannot certainly predict the timing of when certain things will go bad in your environment. But you can know what those things are, and you can stress test your organization so that you can be prepared even though you can't predict.

So as a life insurance company, we've been running scenarios for pandemics for years. We know they'd affect the markets. We wanted to make sure that we had the capital and the reserves to be able to meet all of our policy owner claims. And that allows us to be competent, that track record, that preparation, but the humility comes from none of us exactly understand how this unfolded and how it will unfold in the weeks and months and even years ahead. And that's why we need to remain agile and remain humble.

JULIE HYMAN: Ted, it's Julie here. Thanks for joining us. So give us a snapshot, even if you don't know how it's going to unfold in the weeks ahead. You have a lot of clients. You have a lot of employees, and I'm wondering what you're hearing from them. I mean, we have those sort of macro economic data points, right? We heard today the private jobs report continuing to show job losses. We've got the jobs report coming on Friday as well. Home sales are going up. I mean, we have all these sort of data points coming at us. What about your data points at your company?

TED MATHAS: What we're hearing across the board from everybody that, because we all, you know, while we may work in different places, we live in the same kinds of communities, is this great deal of uncertainty and ambiguity. It shows up in the markets in terms of volatility. It shows up for consumers in trying to understand their, you know, how they're going to behave in any given point in time, whether or not they have the continued economic safety to be able to continue spending and the like. So what we have tried to do is use our preparation to address this. Our organization is built to take risk away from individuals. And so, earlier in the show, you alluded the fact that many companies now, as a result of their businesses, are having to lay off employees. We're able to say in March to every one of our employees, there are going to be no layoffs in 2020.

Now, why could we do that? Because we knew how things would unfold in the markets or our business in 2020? No, but we had confidence that we can think and plan for the long term. We were prepared, and our employees are one of our most critical assets. So having them first get out of harm's way, making sure that they are safe, but then know that they have economic security, then they can help our customers deal with their anxiety. It's hard for any of us to deal with our anxiety, you know, and help others when, in fact, we ourselves are feeling that same degree of uncertainty and anxiety.

ADAM SHAPIRO: You also have about $28 billion in reserve at least going into this pandemic, which is almost twice what I think Mass Mutual had. But I want to ask you about one of the things the company is doing, which is the Brave of Heart program, which we hear people say thank you to our essential frontline workers, but you're putting money into the pockets of health care employees and volunteers. Tell us about this, and the grants can be anywhere from 15,000, but you're ramping that up in the second phase. Who's getting this money, and how does it work?

TED MATHAS: Right, so I think like all of us, when this hit, there's a period of shock, and then there's a call to action. And again, because of our preparation, because of the more than adequate reserves in capital we have, we weren't worried about being able to pay customer claims. In fact, we're able to tell people they don't have to pay their premium payments. As I said before, we also were able to provide stability to our employees.

But we have a larger responsibility to society than just to our customers, than just to our employees, and we said, what can we do? And companies were stepping up, and everyone was recognizing the people that are putting themselves on the frontline, health care workers who are putting themselves at risk in order to do their jobs, what can we do to help? Some people, companies we're building ventilators. Others we're making other kinds of PPEs available. But we decided, what can we do best? We took the time and we partnered with Cigna and developed a fund, and the fund is to pay benefits to cover expenses for any families, any loved ones of individuals who are health care workers, and that's not just the doctors and the nurses, that's the janitors and the orderlies who likely don't have the kind of financial protection in place today to deal with this event.

We're providing those funds so that it can make sure that their kids are OK, they can pay the rent, they can stay in their homes and they can put food on the table. And New York Life put up 25 million. Cigna put up 25 million. And New York Life has also put up an additional 25 million to match any individual grants which we are getting, and I'm really proud that this reflects the company's values, but also, we were able to focus upon this because of the preparation we'd done and not having to worry about other core aspects of our business.

ADAM SHAPIRO: Ted, one thing people try to do during economic uncertainty is find some security, and there are pros and cons for annuities. Your company sells annuities. I'm curious though, because I love to go on Blueprint annuity finder, it actually lets you compare what would happen. And one product that I keep following shows that if you had bought the annuity, say two years ago, the same product today with the same kind of payout timeline would pay out far less than it would have two years ago. That has to do with interest rates. What case would you make for people to buy an annuity when interest rates are near zero?

TED MATHAS: Right. Interest rates have an impact on any part that somehow leverages the fixed income markets. And certainly, the prevailing level of interest rates today being at all time lows puts downward pressure. But we also have to recognize it puts downward pressure on most any asset that you're going to own. So that if you look across on a relative basis, many fixed income products can still be relatively attractive.

But the case in particular for income annuities, and I think that's the core product that a life insurer should offer, income annuities are essentially a private form of Social Security. Lifetime guaranteed income. And what it is is it pools the risk associated with a wide array of individuals and allows us, therefore, to have a mortality credit. Everybody gets a paycheck for as long as they can live, right? And that means everybody gets what they need, and it's a guaranteed fixed check from-- and this is the key thing-- you have to go to a very highly rated life insurer, because this is a 30 or 40 or 50 year promise. So the case is if you want stability, if you want a pay check in retirement, and most of us have stability today if we feel confident in our paycheck, and a paycheck from one of the nation's only two AAA rated mutual life insurers guaranteed for the rest of your life, that's the case for buying an income annuity in particular in today's volatile economic environment.

ADAM SHAPIRO: Ted Mathas became the CEO of New York Life just as we were going into the last recession, the great financial collapse of 2008. You're steering your 12,000 team members at New York Life through this downturn. We appreciate your insight here. All the best to you and the team at New York Life.

TED MATHAS: Thank you very much, Adam. Good to be with you.