Sun Life Financial of Canada’s decision to close to new business should not be seen as the “death knell” for variable annuities in the UK, according to Hargreaves Lansdown.
Last week, Sloc confirmed plans to shut its doors to new customers from December 3. In a brief statement, UK chief executive Janet Fuller said the decision was due to external volatility and uncertainty over capital requirements.
She said: “As a consequence of volatility in the economic landscape and the continuing high degree of uncertainty about capital and other business requirements, we have decided to focus our resources on our existing customers in the UK.”
A company spokesman confirmed that around 100 emp-loyee positions were under threat as i2Live and Financial Foundations will no longer write new business.
The company has entered into a statutory 90-day consultation period with employees, after which total job cuts will be confirmed.
Sun Life Financial of Canada follows in the wake of The Hartford, which pulled out of the UK variable annuity market in May 2009 due to capital pressures.
Hargreaves Lansdown head of pensions research Tom McPhail says he was “a little surprised” at Sun Life’s decision.
He says: “I do not see this as the death knell for variable annuities. There are lots of pressures on conventional annuities and while the pure, unmitigated market risks of drawdown are alright for some, others remain distinctly nervous.
“Logically, products such as variable or with-profits or temporary annuities are where a lot of the market is going to come looking for answers. There are billions of reasons why this market has a good potential future.”