iA Financial Group saw a dip in profitability in 2020 versus 2019, but individual life insurance sales paint a very different picture.
The insurer reported a 40% increase in sales in this market segment in the fourth quarter of 2020 compared with the same period in 2019. Sales in this segment totalled $71.7 million, “clearly demonstrating that with our strategy focused on the client and distributor experience the Canadian insurance market is not mature for us,” CEO Denis Ricard said during a conference call with financial analysts.
This sales growth, which Ricard described as stronger than expected, came at a price, he adds. The insurer was forced to pay higher than expected commissions and sales bonuses in the fourth quarter of 2020.
Inflow of funds
iA’s premiums and deposits thus grew by 28% during this period, for all segments combined. Wealth management sales received net inflows of nearly $800 million in Q4 2020 for segregated funds and mutual funds.
In mutual funds, “gross sales were up 34% year-over-year to $760 million,” says Michael Stickney, Executive VP & Chief Growth Officer at iA Financial Corporation. “Net sales recorded inflows of more than $245 million, the strongest result since Q1 2013. This performance was supported by the contribution of our affiliate networks. As a result, the net inflow from seg funds and mutual funds combined was superior to $2 billion for the year,” he points out.
Individual life insurance: Two products spur sales
In individual life insurance, two products achieved remarkable sales growth: Participating whole life insurance, launched in mid-2020, and universal life insurance with a yearly renewable term (YRT) cost option. Renée Laflamme, Executive Vice President, Individual Insurance, Savings and Retirement, told an analyst in detail how the insurer stood out.
“We've experienced great success. Of course, the two new products are part of that success. We have made some projection of how much of those new projects we would sell. But the biggest success is really the performance of our different networks,” she said, adding that in the fourth quarter, all distribution networks carried through and made significant growth.
Digital technology comes into play
The insurer’s EVO digital platform also gave sales a boost, says Laflamme. “EVO and all our digital tools have been a high competitive advantage. And once you get advisors starting to use a tool and being acquainted with it and liking it more and more, then there is a stickiness to the advisors using iA. And we do have a growth of number of advisors having first year, new commission this year. So really a combination of all things, not necessarily only the two new products.”
Did one of the two products generate better sales than the other? iA does not give details about the product mix, but Laflamme did mention that the shorter-term product was more popular.
“Well, those products are fairly complex. Each and every one of the advisors and MGAs and distribution network do their analysis, and they would prefer different features. In our specific case, our product is really tailored to our target market, which is the mass and the mid-market and getting up in the mid-market. In that market, we certainly have some competitive advantage,” she explains.
