Sun Life Financial U.S. plans to introduce a living benefit rider in its variable annuity lineup today as part of a strategy to gather assets by selling to customers nearing retirement.
The Wellesley Hills, Mass., unit of Toronto's Manulife Financial Corp. said the optional living benefit, Secured Returns for Life Plus, is available in its Masters variable annuity product line. The benefit offers an automatic step-up program and a program that awards annual bonuses to customers for deferring income.
The enhancements, in combination with Sun Life's guaranteed principal and income benefit, are intended to let clients increase their guarantees in any market condition and maximize their chances to expand retirement income.
Mary Fay, a vice president and general manager of Sun Life's annuities division, said the company is focused on generating business by offering products that promise customers an income stream in retirement.
"We are developing our foundation in order to grow our business," Ms. Fay said. "We have added wholesalers and continue to develop products to offer through banks, independent financial planners, and the wire houses."
Sun Life, which had $332 billion of assets under management at Dec. 31., has increased its wholesaling force by 167.8%, to 75, since the end of 2004. Ms. Fay said she expects to add more. The larger sales force has helped spur growth, she said, including the roughly 25 wholesalers devoted to the bank channel.
"I think that we have a field force that is a respectable size," she said. "Sun Life Financial has strong products and the right people on the street to tell the story. We will continue to grow."
"Building new products is part of the equation," she added, "but having wholesalers who can help expand distribution is essential, as is having good customer service. This is all part of growing our business."
Analysts said innovative riders have stimulated a rebound in variable annuity sales. Banks' variable annuity sales were nearly flat last year, according to Kenneth Kehrer, the president of Kenneth Kehrer Associates, a Princeton, N.J., consulting firm that tracks bank annuity sales. His firm's data showed that the top 22 providers in the bank channel had $17.6 billion of variable sales last year, up 1.1% from 2004.
Mr. Kehrer said he expects many of the companies that distribute variable annuities through banks to post first-quarter increases. Michael White Associates, a bank insurance consultant firm in Radnor, Pa., said everything indicates that variable annuities are ready to bounce back.
"There is still a lot of money to be accumulated and certainly will be a lot more distributed through variable annuity products," Michael White said. "There is a retirement bulge coming, and most firms are looking to take advantage with innovative annuity products."
Bank-channel sales rose in the first quarter, and overall variable annuity sales, in all channels, are accelerating, according to David Jacobson, a spokesman for Sun Life. Ms. Fay said sales have improved industrywide and the outlook for this year favors more growth in variable annuities. Sun Life's first-quarter sales, including through the bank channel, have improved, she said.
"We believe we have grown in that channel," she said. "That is an important distribution outlet for us." The Kehrer firm ranked Sun Life 12th last year in bank-variable annuity sales, with $504 million, and 14th overall, with $894 million of fixed and variable annuity sales through banks.
Ms. Fay said the decline in defined benefit pension availability has more people looking for variable annuity products that will give them a consistent income stream into retirement.
The Secured Returns for Life Plus product offers two enhancements, including an automatic step-up option that lets customers lock in any market gain every three years. The second enhancement, the "plus 5 program," lets customers boost their guaranteed withdrawal amount by 5% of their principal, or the stepped-up amount, whichever is greater, for each year withdrawals are deferred during the contract's first 10 years.
With the step-up program to take advantage of rising markets and the plus-5 feature to expand the withdrawal guarantee during down markets, Secured Returns for Life Plus is designed to assure retirement-focused customers that they will not outlive their income.
Secured Returns for Life Plus was to become available today on most Sun Life variable annuities. The company has operations in Canada, the United States, United Kingdom, Hong Kong, Philippines, Japan, Indonesia, India, China, and Bermuda.
