Sun Life adding VA wholesalers, cutting back on VA products

The broker-dealer channel is in the cross hairs of Sun Life Financial Inc. as the company aims to bolster its ranks of variable-annuity wholesalers and reach out to broker-dealers as a new channel for life insurance sales.
“There’s a flight to quality, fewer competitors, and one thing we’ve noticed is that we’ve kept our wholesaling force at about the same number — but we’ve upgraded the talent,” said Terry Mullen, president of Sun Life Financial Distributors Inc. He spoke at the company’s Investor Day in New York today.
Sun Life brought on 43 top variable-annuity wholesalers, including additions from other competing insurers, Mr. Mullen said. The carrier has about 80 wholesalers in its annuity space.
The company is also planning on expanding wholesaling to broker-dealers in the life insurance space. That includes its Sun Executive life insurance product for small businesses, which addresses key-man and business succession concerns.
In the annuity space, the company has pulled back on some offerings. Case in point: In 2007, Sun Life sold 17 types of variable-annuity products, eight kinds of fixed annuities and four types of fixed index annuities. In 2009, the carrier trimmed its portfolio to eight variable annuities and four fixed annuities. It plans on pulling out of the fixed-index-annuities market, cutting sales of that product this year.
The company will examine the opportunities for a registered fixed-index-annuity product next year, said Stephen Deschenes, senior vice president and general manager of annuities at Sun Life. The non-registered indexed annuity “doesn’t take advantage of our registered distribution’s strength,” he said.
On the variable-annuity side, like other annuity providers, the insurer has had to curtail some VA risk. Changes for 2010 include pricing mechanisms that allow Sun Life to raise costs based on external market indexes so that the price of the product reflects the current hedging costs, Mr. Deschenes explained.
On the product innovation side, Sun Life is developing a hybrid, benefit-linked product, president Jon Boscia said. “There are products in the space that will be more consumer friendly by combining the characteristics of what’s in life insurance with what’s in a health insurance policy,” Mr. Boscia said. “This way, the consumer doesn’t have to pay top dollar for each.” But he warned that while some hybrid concepts look good on paper, the regulatory approval for them could be lengthy.
“Say you had a situation where you combined a reverse mortgage with an annuity, long-term-care insurance and a death benefit,” Mr. Boscia said. “Getting through the regulatory-approval process will be one hurdle, then taking that to the distribution will also be a second hurdle, and then simplifying it for the consumer will be a third.”
He did predict, however, that “the hybrid space will be an active space in the years to come.”