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Life insurance sales: major insurers’ results vary widely

By Hubert Roy | September 14 2020 10:28AM

Photo: Pixabay

How did the COVID-19 pandemic, particularly the lockdown, affect lifecos’ sales in Canada in Q2 2020? Some large insurers fared better than others.

In conference calls following the announcement of their financial results, CEOs and top managers recapped their sales in replies to financial analysts. Insurance Portal reviewed the call transcripts to produce this article.

iA sees sales increase

iA Financial Group reported a rise in sales in several market segments in Q2 2020 versus the corresponding period of 2019. Individual life insurance sales totalled $53 million during this quarter, a 10% increase over one year.

Michael Stickney, Executive Vice-President and Chief Growth Officer, iA Financial Corporation Inc. said the launch of the insurer’s participating product bodes well for strong sales in coming quarters. “In individual insurance, our distribution networks are fully operational at a distance. From the beginning of the pandemic, we were confident that our technological tools would facilitate our advisers' transition to remote distribution. This is now confirmed by our strong sales results during the second quarter,” he said.

Sales were also robust in wealth management, at $175 million for the quarter. Guaranteed products drove excellent growth, Stickney explained.

Segregated fund sales advanced by an impressive 10%, equal to growth of $609 M.

“Noteworthy in May, for the first time ever, the company ranked first in the industry in gross seg fund sales. We also remain #1 in the Canadian industry with net sales totaling $417 million for the quarter,” Stickney stated, adding that “our high-performance digital platform has been a key factor in supporting our advisors in selling at a distance.”

Renée Laflamme, Executive VP of Individual Insurance, Savings & Retirement, assured financial analysts that the best is yet to come for IA in individual life insurance sales. She explained that sales in Q2 2020 still did not take into account the sales of the participating product launched in June. The launch of the revamped UL product in February was a success, she said.

iA Financial Corporation CEO Denis Ricard mentioned that iA has been deliberately targeting certain markets over the years. “iA has always been recognized as a provider or an insurer of covering the family market, the mass market, although we are present in higher amounts as well. When we see that our business model is resilient, it's a combination of the fact that we are presenting all distribution, we have the right technology and also we target the right market,” he explained.

Sun Life sales slump

Sun Life Financial saw starkly different results. All segments in Canada declined in the second quarter of 2020 versus the corresponding period of 2019.

Insurance sales slumped by 22% between the two comparison periods. The insurer pins this downturn on a weaker group insurance market combined with lower individual life sales. Wealth management sales fell 20%.

Even so, Sun Life anticipates a recovery in the coming quarters. The insurer gave financial analysts an overview of its July 2020 sales. Individual life insurance sales were at 95% of July 2019 levels, while wealth management sales were at 110% of the levels of a year ago. Group insurance sales and employee benefits were relatively unchanged from 2019.

CFO Kevin D. Strain said that the mortality and morbidity rate linked to the COVID-19 pandemic amounted to less than 5% of the usual monthly average for mortality and disability claims paid.

Sun Life CEO Dean Connor commented that 85% of the insurer’s life insurance applications in Canada were processed without the need for lab tests. This achievement was “supported by the introduction of accelerated underwriting last fall and special accommodations for COVID-19,” he says.

Digital technology will likely become more prominent in Sun Life’s Canadian business. Sun Life Canada President Jacques Goulet explained that putting in place his digital coach Ella let them generate deposits of $500 million from group pension plan participants of the first six months of 2020.

“So that’s obviously good. Our digital assets are helping us grow the business,” he continues.

Marked slide at Great-West…

At Great-West Lifeco, sales declined by 19%. Canada is in fact the only jurisdiction where the holding company’s sales declined.

Individual life insurance sales held steady. Group plans were the main brake on sales, the executives mentioned in their presentation to financial analysts following the announcement of the Q2 2020 results.

What is individual life insurance’s secret to success? The adoption of digital solutions helped during the pandemic. The holding company took advantage of various factors such as the higher age of insurance applicants, along with the processing of more complex cases before the lockdown, which were completed in the second quarter of 2020.

The reopening of paramedical services is promising, but the holding company projects that sales may be lower in the short term, due to capacity constraints. “Long-term demand for insurance remains strong,” the company explained in a slide presentation provided to the analysts.

…and at Manulife

At Manulife, new business plummeted 29% in Q2 2020 versus the corresponding period of 2019. Insurance sales were the culprit, CFO Phil Witherington said in a conference call with financial analysts following the announcement of their financial results. Insurance sales plunged 21% versus 4% for annuities sales.

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