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Business Profile: Canada Life

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Up until 1995, Canada Life acquired Manulife’s UK business followed by MetLife’s UK business, Albany Life, in 1997.

Individual business manager John Occleshaw says: “We have grown rapidly since the mid-1990s through either new business or acquisitions.

“In 2002, we made a big strategic decision. We had a pretty full product range and distributed through IFAs and directly. First, we decided to close down the direct arm because we came to the view that independent advice was the way forward.

“Second, we narrowed our product range to the businesses where we thought we could become market leaders. Some of the arms such as individual protection were not big enough to compete with the rest of the market. We now have three businesses group risk, retirement income and wealth management.”

This period of change at Canada Life continued into 2003 when it was acquired by Canadian company Great-West Life, a move Occleshaw believes has benefited the UK company.

He says: “Great-West is AA rated, so we are part of a financially strong company.”

Following some big annuity transactions in the intervening period, Canada Life has gone from £2bn assets in force to £20bn. Annuities make up the majority of Canada Life’s proposition.

Occleshaw says: “We were the first company to launch a flexible annuity back in 2000. It was a clever prod-uct because regulation was more restrictive at the time. We designed a product that combined investment and annuity in a compliant way.”

Since then, Canada Life has extended its armoury to include enhanced annuities, annuity protection and a purchased life annuity.

“The purchased life annuity is for people who have money sitting outside the pension space and want to turn it into an income with an annuity. Even though we offer standard annuity products, we make sure extra options are there.”

One way Canada Life has extended these options is with its guaranteed retirement plan, launched last year.

Occleshaw says: “It is a deferred annuity. We are the only provider to offer this it flies in the face of where the market is going with phased retirement and drawdown. We went the other way and said if you are in your fifties and trying arrange a particular retirement income, this allows you to buy that income upfront and move it over gradually rather than moving one lump sum over, which can be risky.”

Occleshaw believes that this combination of flexibility and simplicity will encourage people to save.

“Flexibility is good but it complicates things. The old system was simple save then annuitise. Now it is difficult to explain to someone what will happen to their pot. At least with our deferred annuity, people get a feel what is happening.”

Occleshaw:

’The old system was simple - save then annuitise. Now it is difficult to explain to someone what will happen to their pot. With our deferred annuity, people get a feel what is happening’

However, the deferred annuity is the last product Canada Life will be launching for some time.

Occleshaw says: “I would love to say we have a whole raft of exciting new products but unfortunately we have to focus on regulatory change over the next 12-18 months.”

Solvency II, the gender directive and the RDR are top of the list of the company’s regulatory priorities.

Occleshaw says: “In terms of the RDR, we are well placed. We will have to change some of the technical details around adviser charging but we are there or thereabouts.”

He believes the biggest issue is not getting Canada Life’s systems up to scratch but how to help IFAs through the transitional process.

He says: “We will be investing in three areas to help advisers technical support, technology and service. We recently relaunched our technical services in order to help advisers with more complex cases. We have also spent a lot of time on developing our enhanced annuity electronic quotation request form, which will provide instant information to IFAs and hopefully streamline their operations.”

Another area Canada Life will be focusing on is its involvement with Nest. The company is on Nest’s annuity provider panel and plans to develop an interface to make the process slicker.

Occleshaw says: “Once people have saved through Nest, they will potentially be buying an annuity through us. We want to plug the functionality we already have into the Nest portal within the next year.”

However, Occleshaw does not plan to be as involved with some of the other industry developments, such as the open market option. He says the progress made so far is welcome but warns that forcing everyone to shop around would simply incur a pointless expense for the smallest pots.

“There have been huge strides forward with the open market option in the last few years. Although it is important that people get the advice they need, I think we are in danger of misrepresenting where the market is today.

“There are always going to be people with small pots who will not benefit from shopping around and there is no point trying to force them to.”

Omo aside, Occleshaw believes the future is bright for the annuity market and predicts more innovation from providers.

“I think we will see more flexible solutions. Canada Life will have a role to play in terms of annuities for savers with larger pots as well as the traditional small to medium pots. It will be interesting to see which products for people with more savings gain traction because it is not a huge market.

“Innovation in the annuity market tends to be stifled by the regulator but there have been some good steps in the past few years. Let’s hope that continues.”

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