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Segregated funds: net sales sink

By Alain Thériault | March 07 2012 09:17PM

Net sales of segregated funds in Canada slumped by over 6% in 2011 versus 2010. This decline is due to the poor performance of some high-calibre players.
Total net sales of segregated funds in Canada were $2.159 billion in 2011, down from $2.302 billion in 2010. This amounts to a decrease of 6.2%, says Investors Economics, which compiled the data. Net sales are the net result of gross sales less withdrawals.

In 2011, the seg fund market was dominated by five players: Manulife Investments, Great-West Life (including Canada-Life, London Life, Investors Group and Mackenzie), Sun Life Financial, Industrial Alliance and Empire Life. These leaders controlled 85% of assets under management in Canada, or $72.7 billion of the total $86.4 billion, at Dec. 31, 2011. Incidentally, total assets edged down 1.6% since 2010.

Three of the five Canadian market heavyweights sold less in 2011 than in 2010. Smaller players with strong sales in 2010 also saw a downturn in 2011. For the market overall, seg fund sales were dragged by poor performance.

Sales plunge at Sun Life
Sun Life’s net sales of segregated funds plunged between 2010 and 2011. From $632 million in 2010, they diminished to $15 million in 2011. Industrial Alliance reported $721 million in net sales of segregated funds in 2011, compared with $927 million in 2010, for an 18% drop. Empire Life ended 2011 in the red, with redemptions of $40 million versus net sales of $36 million in 2010.

Some players just below the Top 5 had robust sales in 2010, but faltered in 2011. Ranking seventh in terms of market share, Desjardins Financial Security sustained a drop in net sales of over 42%. They shrank from $686 million in 2010 to $396 million in 2011.

Net sales of segregated funds at SSQ Life and Primerica were also halved between 2010 and 2011. At number 10-ranked SSQ Life, net sales dropped from $190 million in 2010 to $87 million in 2011. Sales at eighth largest player Primerica declined from $64 million in 2010 to $32 million in 2011.

Holding the ninth largest market share, Transamerica Life Canada posted improved results although it remained in net redemption territory. The insurer saw negative net sales of $110 million in 2011, compared to negative net sales of $650 million in 2010.

In 12th place in the rankings, CI Investments saw negative net sales of $99 million in 2011, from $251 million in 2010.

Manulife and Great-West are the only two players in the Top 5 to report gains in segregated fund sales from 2010 to 2011.

Manulife’s segregated fund sales doubled in 2011 compared with 2010, to reach $583 million. This is still far below previous years when its star GMWB product IncomePlus led the company to sales of 1.8 billion in 2009 and 2.7 billion in 2008. At Great-West, net sales of segregated funds rose by almost 63% between 2010 and 2011, to reach $182 million.

RBC Insurance, generated net seg fund sales of $76 million in 2011, for 65% growth since 2010. Standard Life did not sit on the sidelines. The insurer racked up $391 million in sales in 2011, amounting to 41% growth since 2010.

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