Growth in its group insurance business and improved market conditions combined to give Standard Life Canada a record year in 2010. The company’s strength has resulted in a ratings upgrade by Standard & Poor’s. The ratings agency has also revised Standard Life Canada’s status in relation to its parent from “strategically important” to “core”.In early June, S&P raised Standard Life Canada’s counterparty credit and financial strength ratings to “A plus” from “A” with a stable outlook.
“The upgrade reflects Standard Life Canada’s greater significance to the Standard Life PLC group…This improvement is supported by Standard Life Canada’s long history and leadership position in the Canadian group pension market. Underpinning the ratings are the company’s strong earnings profile, very strong capital adequacy, conservative investment portfolio, and strong financial flexibility,” notes S&P.
For the year 2010, the company’s earnings were $290 million, compared to $109 million in 2009. Business growth and improved equity and property market conditions were the main drivers of higher earnings for the year, Standard Life Canada explained in a press release.
In the release, Joseph Iannicelli, president of Standard Life Canada said, “2010 was a record year for Standard Life in Canada in many ways. Profit is the highest it has ever been for us and we delivered on our goals to grow our business in our three core segments,” which are group DC pension plans, disability management and retail investment funds.
Interviewed by The Insurance and Investment Journal, Mr. Iannicelli added, “Our sales of all group retirement plans have boosted our numbers significantly. According to LIMRA, our sales increased 41% in 2010 compared to 2009. This is quite an achievement if you consider how weak the market has been – 5% decrease in sales.”
At $3.3 billion, premiums and deposits in the company’s group business were 11% higher in 2010 over 2009.
Standard Life Canada’s Ideal Segregated Funds also shone with premiums and deposits growing 63% to $703 million in 2010. “Our individual seg funds continued to grow, thanks to the new features we launched in 2009 which gave an edge to our offering,” Mr. Iannicelli commented.
In April of 2011, the company added a guaranteed lifetime withdrawal benefit (GLWB) to its seg line up. Mr. Iannicelli says it is too early to draw any conclusions about the sales success of this product, but added that it has been very well received overall. “The advisors like our holistic approach where it’s not only about GLWB. The 3 series within the Signature Series make Standard Life’s product different and allows advisors to select the proportion of their client’s portfolio to put in each.”
He added that the company has developed a hedging program to manage the risk related to its entire seg funds family.
2011 promises to be a year of change for the company. In May, the company announced that Mr. Iannicelli will be leaving the company by the end of the year. After a 19-year career with Standard Life, he has decided to pursue other interests, said a company statement.
“The transition phase is going to be short and the timing for my replacement to come on board is just right,” he told The Insurance and Investment Journal.
The Canadian board of directors, along with senior management in the UK are leading the process to find his replacement. “I have announced that I will stay until towards the end of the year in order to ensure a smooth and controlled transition. I suspect it will take some time for the process to work itself out and we will announce something as soon as we can.”
In May, the company also announced the appointment of two executive leaders. Jean Guay, fomerly senior vice-president, customer experience was appointed senior vice-president, sales and marketing.
Graham Nichol was appointed to Mr. Guay’s former position. Mr. Nichol was previously customer service director of Standard Life in the UK.
Mr. Iannicell says that these appointments will help make the leadership team stronger and stable, “with the necessary expertise to deliver on what we want to do with Standard Life in Canada – we want to grow the company and be recognized for the focus we put on our customers.”
Although not yet formerly announced as of early June, the company told The Insurance and Investment Journal of two more appointments. Jean Goulet, has been named vice president of marketing. He has worked for a number of large and mid-sized financial institutions, including Standard Life from 1986 to 1998.
In addition, Christine van Staden has been appointed regional vice president, central region sales, group savings and retirement. She has held senior positions at some of Canada’s leading consulting firms.
Other changes include the company’s brand repositioning and refreshed visual identity launched in February in the UK. The new visual identity will be introduced in Canada later in the year.
Challenges and opportunities
As he prepares to leave the leadership of Standard Life Canada, Mr. Iannicelli said he thinks there are many challenges, risks and opportunities that lie before the company. “Market conditions, interest rates, our regulatory regime and perhaps most importantly our customers evolving needs create a dynamic working environment. I believe our strategic planning cycle in some ways has been reduced to three-month intervals whereby the company that has the greatest customer insight and that is able to adapt quickly to different market conditions will be the most successful.”
In terms of the industry’s outlook in general, Mr. Iannicelli says he is optimistic. “I believe that for a country of our size, the potential is immense. We have the fifth largest pension market in the world that is growing and competition is strong which will continue to drive innovation and competitive pricing for our customers. We, as a country, will need to address our health care issue sooner rather than later and the private sector will have a role to play in this. We need to continue to drive efficiencies because the customer expects the price/value equation to continually work in their favour. These are very exciting times.”