Retail Insurance and Annuities Canada

Transcription

1 Bruno Michaud Senior Vice-President Administration and Sales Retail Insurance and Annuities Canada Investor Day, June 11,

2 Discussion Points Individual Insurance Maintain our focus on family market Opportunistic in high-end market Segregated Funds New distribution strategy: first results are encouraging New retirement income product in development Distribution The backbone of IA s success Assures long-term sales growth 2

3 Individual Insurance Sales Strong in all environments Canadian Sales (in $M) interest rate decline Premium increases Shift in product mix surge in sales High-end market Fire sales 2013 sales -3% YoY Lower UL sales (level and quick pay)

4 Since the Last Investor Day Changes at IA and in the industry mainly due to prolonged low interest rate environment IA Profitability strengthened through strain/capital management Successful roll-out of Excellence throughout Canada Adjustable whole life product launched Conversion of 10/8 clients to new solution New compensation agreements for MGAs and Career network IA and Industry Premium changes Term: small decreases Permanent, UL and CI: four increases totalling ~+50% Rise in popularity of Participating Whole Life products IA does not offer PAR product Universal Life sales have felt impact 4

5 The Comeback of an Old Product PAR is growing at the expense of UL Product Mix First Year Total Premiums 55% 2011 was a turning point for UL 33% 29% 23% 23% WL - PAR Universal Life Term 11% 15% WL - Non PAR Q1/14 Source: LIMRA (PAR = Canada Life + Great West Life + London Life + Sun Life)

6 Number of Policies Sold: A Different Story Family market is going term, high-end is going whole life PAR Product Mix Number of Policies % 56.7% Term 29.5% 11.1% 7.2% 18.0% 15.3% 10.0% Universal Life WL - Non PAR WL - PAR Q1/14 Source: LIMRA (PAR = Canada Life + Great West Life + London Life + Sun Life)

7 Staying the Course IA market share stable despite shift in product mix IA Market Share (% of industry sales) 14.9% Number of policies sold 14.1% 10.4% 10.6% Total premiums 7 Source: LIMRA Q1/14

8 What is a Participating Whole Life Policy? Very old product Backbone of the insurance industry (mutuals) Very conservative pricing PAR premiums = 2 to 3 times UL level premiums Profit (loss) belongs mostly to policyholders who receive dividends PAR products NON- PAR products 90% 1 min. 2.5% to 10% 1 to policyholders as fee income to shareholders 100% to shareholders Difference in shareholder value creation 8 1 According to Insurance Companies Act limits, depending on the size of the participating account.

9 IA s Individual Insurance Strategy Deliver long-term value to shareholders Our focus Maintain our leadership position in family market Ensure our wide product offering remains competitive and profitable Be opportunistic in high-end markets Our response to PAR Develop a new product Meet the need of PAR (high-end) buyers High guaranteed cash values Potential growth of death benefit and cash value Low volatility High flexibility Lower premiums than PAR whole life Will create value for clients and shareholders 9

10 IA Seg Fund Business Adapted to current macroeconomic and regulatory environment Gross Sales Product mix focused on low risk and low capital-intensive products $1.13B $1.08B 10 GMWB withdrawn (August 2012) Reduced MER on low guarantee product Introduced new low MER product (75/100 guarantee) Extended hedging to almost all seg funds GMWB 47% High guarantees 32% Low guarantees 21% High guarantees 44% Low guarantees 56% 2012 LTM Last 4 Qs

11 Our Plan for Seg Funds Better leverage existing distribution partners and attract new ones 2014 Review our distribution strategy Build a dedicated sales team for investment products Experience in career agencies has begun Refine current portfolio Simplify line-up Introduce a new retirement income series Lifetime income GMWB-annuity hybrid More affordable and transparent for clients Lower capital requirements and easier to hedge 2015 Introduce a new High Net Worth series 11

12 The Importance of Distribution Building distribution guarantees long-term sales growth Long history of success in building distribution Multi-channel distribution platform Ensures primary shelf space with distributors Work with our distributors to leverage our other businesses Consumers need advisors to help them make sound financial plans and make the call to action 12

13 IA s Retail Business in a Nutshell Leveraging a well-diversified platform Life Insurance Career 33% Dedicated MGAs 24% Other MGAs 43% Seg Funds/GICs Career 40% Dedicated MGAs 23% Other MGAs 37% IAAH Career 56% Dealer Services 11% IAAH Direct 33% IA Excellence Career 16% New business from IA MGAs 32% Other MGAs 52% 13 Basis: 2013 numbers; Life insurance: min. premium sales; Seg.Funds /GICs: annuity sales; IAAH: direct written premiums; IA Excellence; sales

14 Trends in Distribution Always looking for new opportunities MGA Consolidation Aging broker population Focus on margin improvement Desire to go public The Web Source of information Lead generator A potential opportunity for the family market What are we doing? Ownership in MGAs Web-based experience with partners Opportunities to offer our products to affiliated distributors (Investia, FundEX, NFIA, etc.) 14

15 15 Q&A