Less than a year after its introduction, Standard Life Canada has temporarily suspended new sales of its Guaranteed Lifetime Withdrawal Benefit product Ideal Income Series as of April 16.
In a news release on April 11, the company said its decision is a responsible one for all stakeholders, given the current economic and regulatory environments. “Our industry is challenged by historically low interest rates, market volatility and strengthened regulatory capital requirements,” said Sylvain Messier, vice-president, strategy and development at Standard Life.
This move by Standard Life closely follows Transamerica Life Canada’s decision – announced in January – to withdraw its Guaranteed Withdrawal Benefit (GWB) product Five for Life from the market (See The Insurance and Investment Journal, February 2012). Over the last several months, other insurers have also taken measures to adjust their GWB product lines and have raised pricing.
“Standard Life believes that another round of changes to this type of product is inevitable. Under these conditions, we are suspending new sales of our GLWB and concentrating on solutions that address client needs and meet advisor expectations over the long term,” added Mr. Messier.
The company added that this measure will remain in effect until the economic and regulatory environments improve. In the meantime, Standard Life will continue to explore suitable alternatives.
Standard Life was a recent and hesitant entrant into the GWB market, which was first opened up by Manulife Financial in late 2006 with the introduction of IncomePlus – a product that quickly attracted billions in sales.
In November 2008, following the stock market crash, Standard Life did an about-face by deciding not to launch a GWB product in 2009 as it had originally intended. At the time, the insurer said it had delayed the launch because of the economic crisis and that its primary concern was to make sure that the product would be sustainable for the long term.
Finally, in May 2011, Standard Life introduced its GLWB and by Sept. 30 had already attracted sales of $37 million into the product. For the first three quarters of last year, the company had the second highest level of net seg fund sales in the industry at $298 million.