Starting from Scratch

Lucky for Jackson National Life Insurance Company (JNL, Lansing, Mich., $56 billion in assets), the word "please" goes a long way with George Napoles. The founder of the consultancy Cooperative Technologies, Napoles only signed on in a consulting capacity when he agreed to help JNL bring its outsourced IT shop in-house. The life and annuities underwriter decided in 1995 to embark upon the project to better align its IT and business goals. But when JNL CEO Bob Saltzman - a former colleague of Napoles - saw the scope of Napoles' vision, he resorted to pleading with the consultant to join JNL full time.

"I kept saying 'no,' but [Saltzman] kept saying 'please,'" recalls Napoles. Soon after, in 1995, Napoles - who is currently JNL's EVP, CIO and chief administration officer - gave in.

The task of starting an IT shop that was devoid of the most basic hardware, including PCs, was challenging. But Napoles concedes that once he seriously considered the offer, he didn't require a lot of arm-twisting. "Starting from scratch had a great deal of appeal to me," enthuses Napoles. "I'd been given the opportunity to use everything that I'd learned throughout my career with no encumbrances." The consultancy founder's resume includes his start as an actuary with Piedmont Life, as well as top IT roles at Pacific Fidelity Life, US Life and SunAmerica.

Despite Napoles' extensive experience, after joining JNL full-time, the IT veteran felt for the first time in his career like a kid in a candy shop. He was not only charged with stocking the IT department with hardware, software and personnel of his choosing - he was also authorized to name his own budget. Napoles' first objective was to find the right people for the job.

The Perfect Personnel

"I wanted to have an operation with highly qualified people," Napoles explains. Potential recruits had to excel on an aptitude test, only to be subjected to a rigorous skills test, in which they were asked to answer progressively harder questions, until the prospects were no longer able to answer them, relates Napoles. He adds that less than 5 percent of those who began the recruiting process made it to the final team interview. "Good people appreciate the rigorous recruiting process," he says. "It's like being admitted to a select college."

Today, JNL's IT team includes 339 staff members. The CIO explains that he doesn't have to look to consultants for help making decisions. "We already have that talent in-house," he asserts. "We know where we want to go and we only depend on ourselves to get us there." The most significant vehicles facilitating the journey include IBM (Armonk, N.Y.) hardware, Xerox (Stamford, Conn.) printers, and software from Cybertek (Dallas) and FileNet (Costa Mesa, Calif.), explains Napoles.

But JNL's IT shelves weren't always so well stocked. "It took us three-and-a-half years before we could be proud of our hardware and software," concedes Napoles. And, as JNL's product offerings of variable, fixed and equity-linked annuities and life insurance grows, so too must its IT shop. Though JNL's IT expenses are down almost 10 percent from 2003 - because less development work is required of the shop as it becomes more established - its IT budget has more than doubled since the department was outsourced. Napoles explains that although his current IT budget of $46.9 million is substantially more than the $20 million-a-year cost of outsourcing the department, the insurer is now supporting many more products that require greater levels of IT support than were previously needed.

Napoles considers the challenges associated with new products among his most difficult tasks, but he and his team make it look easy. "Our unbundled variable annuity product took five months," from concept to launch, boasts Napoles. "Very few companies in the industry even offer this product because it is so difficult to implement."

JNL's IT group has also kept busy with the in-house development of its Granite system, a broker-dealer back-office administration tool that ties in to the carrier's newly built electronic order entry (EOE) system, which enables brokers to enter trades paperlessly. Napoles decided to build the system after he was unable to find a solution in the existing marketplace.

JNL took a similar approach with its homegrown Reengineered Annuity Conversion for Excellence (RACe) rules-based system. Napoles explains that the document processing system leverages optical character recognition (OCR) technologies. It cleanses data and has the ability to "learn" from its mistakes. "RACe remembers the correction, and all subsequent applications will use the newly learned information," he says.

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Around the time of Y2K, "everything that we had was new. It amazed me that more companies didn't buy new as opposed to retrofitting their old systems. We had the ability to start from scratch; there were no preconceived ideas. It was great," says George Napoles, Jackson National Life Insurance Company.

FOUNDATION BUILDING

COMPANY: Jackson National Life Insurance Company (Lansing, Mich., $56 billion in assets).

LINES OF BUSINESS: Variable, fixed and equity-linked annuities and life insurance.

KEY EXECUTIVES: George Napoles, EVP, CIO and chief administration officer; Clark P. Manning, president and CEO; Andy Hopping, EVP, CFO and treasurer.

IT STAFF: 339

IT BUDGET: $46.9 billion

RECENT INITIATIVES: Development of Granite, a broker-dealer back-office administration tool; an electronic order entry broker trading system; and RACe, an annuities application processing system.

PREFERED VENDOR PARTNERS: IBM (Armonk, N.Y.), Xerox (Stamford, Conn.), Cybertek (Dallas) and FileNet (Costa Mesa, Calif.)

GREATEST BUSINESS CHALLENGE? NAPOLES: "Challenges that are associated with rolling out new insurance products.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio