Transamerica and TD Asset Management close TD GIF II segregated funds to new sales or deposits

par Donna Glasgow | March 26 2009 09:58PM

Transamerica Life Canada and TD Asset Management Inc. (TDAM) have decided that as of March 11, 2009, they will no longer open new policies in their alliance segregated fund product line, TD Guaranteed Investment Funds II (TD GIF II), and as of April 15, these funds will be closed to new deposits from existing policyholders.

TD GIF II funds are issued by Transamerica which provides the segregated fund guarantees, while TDAM provides the fund management.

In a letter sent to dealers on Feb. 9 signed by both company's presidents, Douglas Brooks of Transamerica and Tim Pinnington of TDAM, (a copy of which was obtained by The Insurance Journal) the companies cited "recent market volatility" as leading to this decision.

Barbara Timmins a spokesperson for TD Wealth Management explained to The Insurance Journal that, "A joint decision was made by TD and Transamerica to close TD Guaranteed Investment Funds II to new deposits and policies. However, clients may maintain their current holdings and their policies are unchanged. All guarantees and benefits remain the same and their ability to execute other transactions has not been affected."

When asked to elaborate on the reference to market volatility in the letter, Ms. Timmins stated, "Market volatility drove this decision. This product effectively transfers the market volatility from the policy holder to the issuer. In these volatile times, Transamerica and TD made a joint business decision to close the product to new deposits/policies." 

Geraldo Ferreira, vice president of Investment Products Development & Marketing for Transamerica told The Insurance Journal that despite the decision, Transamerica "remains committed to the segregated funds market place through its own Transamerica Life Canada branded products that offer a wide variety of investment funds, including select funds managed by TD Asset Management Inc." He added that TD-managed funds can be found within Transamerica's universal life products and within the TOP Portfolios. Also, more TD funds were recently added to Transamerica's Guaranteed Lifetime Withdrawal Benefit (GLWB) product Five for Life.

The TD GIF II product was first launched in 2001 and as at Dec. 31, 2008, assets in these funds totalled $517 million. This product also accounted for 16% of Transamerica's seg fund sales in 2008, said Mr. Ferreira.

He added that the company continuously reviews its product offerings and that the closing of a segregated funds contract is not a unique event in the marketplace. "Over the last few years, other insurance companies have closed contracts to new sales."

Mr. Ferreira added that the features on these contracts have evolved with time. "The markets have evolved and so have the demands of consumers when it comes to the types of benefits they want from a segregated funds product, such as GMWBs as an example."

CI funds soft-capped

Back in mid November of 2008, Transamerica and CI Investments announced the soft capping of their alliance seg fund product line - CI Guaranteed Investments (CI GIFs). This means that while this line is no longer open to new contracts, existing investors can still make deposits.

Murray Oxby, a spokesperson for CI Investments explained the reason behind this decision. CI GIFs were first launched in February 1999 and in August 2002, when CI acquired the Spectrum and Clarica mutual funds from Sun Life Financial, "it also agreed to take over the management of the SunWise seg funds, which are now marketed as SunWise Elite Plus. Sun Life continues to issue the policies. Since then, we have operated the two competing segregated fund products. Last year, we made a strategic decision to focus on SunWise Elite Plus and close the CI GIFs to new investors."

As at Dec. 31, 2008, Transamerica had $611 million in CI GIFs, said Mr. Ferreira.

On its website, in a section called Transamerica Alliance Segregated Funds, the company provides product information about CI GIF and AIC seg funds. The AIC funds have not been available to sale to new investors since June 30, 2003, although current contract holders can still purchase additional units.

While Transamerica does not currently offer for sale new alliance seg funds, this doesn't mean that the insurer has closed the door to such products in the future. "Transamerica continues to evaluate various opportunities to expand in this area," Mr. Ferreira states.

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