Annuity FYI Blog

One of Canada’s largest insurance companies, Sun Life Financial Co., is working to expand their U.S. business.  According to The Boston Globe article “Sun Life broadens its horizons in US,” Todd Wallack says that Sun Life is in the midst of a huge nationwide advertising campaign.  Wallack interviewed the head of Sun Life in the U.S., Wes Thompson.  Their U.S. unit is based in Wellesley, MA, employs more than 1,800 people, and serves millions of customers in the U.S.  Sun Life’s biggest products are group life insurance and annuity products.  They hope to grow their U.S. business by double digit gains.

Now is a good time for Sun Life to advertise because costs are low and there are many fewer financial companies on the airwaves than there were two or three years ago.  They have already increased the number of people who know of their company from 4% to 16% of those surveyed.  While group life insurance is their largest segment of business, Sun Life sells many annuity products as well.  President Wes Thompson defended the typical higher costs of variable annuities due to their array of guaranteed riders like death benefits.  He said that they all comparable to the costs and benefits of other industry products.  And while Sun Life moved away from selling fixed indexed annuities because of the general impressions of that business, he does believe that there are good products out there.  Unfortunately, some bad companies had products charging too much in commissions with too high of surrender periods.  Sun Life believes in the life insurance and annuity products they sell and are happy to introduce their company to Americans.

In “Sun Life unit racks up $1B in variable annuity sales” from Tim McLaughlin of the Boston Business Journal, McLaughlin sums up Sun Life’s great quarter.  Sun Life Financial Inc.’s U.S. division is based in Wellesley, Mass.  Sales of their variable annuities in the third quarter were $1.08 billion, more than a 30 percent increase from the previous quarter.  While many insurers have cut back their variable annuity business, Sun Life was able to capture 3.5 percent of the market share.  The wirehouse distribution channel, advisers selling the products to their clients, is where the largest gains occurred.  Annuity sales from variable products doubled from the first three quarters of 2008 to the first three quarters of 2009.

Although consumers have been wary of many variable annuities lately, Sun Life Financial Inc. has made changes that have increased their sales.  This information comes from “Sun Life Beams About Variable Annuities but Barriers Remain” by Matt Ackermann of American Banker.  Valuable leadership changes within Sun Life led to the company “aggressively top-grading its wholesalers over the past five months to boost distribution”.  Sun Life, a company usually ranking 17th or 18th in its industry, has been able to attract previously unattainable talent recently because of the fractured industry.  Their U.S. annuities division released wholesalers who were under-performing and replaced them with some rivals’ strong wholesalers.

These changes led to a 21.8% variable annuity sales increase in the first quarter of this year, as compared to the first quarter of last year.  That increase is over 12% higher than the industry averaged, allotting for Sun Life to have $580.1 million in variable annuity sales for the quarter.  Sun Life’s new talent plans to maintain these variable annuity sales through increased marketing, adding “key advisers”, and offering products to help their customers gain back what they have lost of their retirement portfolios in the past year’s economic crisis.