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Sales of segregated funds beat a hasty retreat

by

Alain Thériault

6 February 2019 13:30

In the third quarter of 2018, the sales of segregated funds in terms of premiums declined 4 % compared to the same quarter of 2017, to reach $ 2.2 billion (G$), reveals the latest report from LIMRA on the sales of annuity in Canada.

The decline is even more accentuated since the beginning of the year. The segregated funds have chalked up sales of$ 7.3-billion in terms of premiums, in the period from 1 January to 30 September 2018. This is a decrease of 8 % compared to the same period of 2017.

The results presented by LIMRA are both on the segregated funds in the accumulation period, and product disbursement will be made, when the fund matures. This note also applies to the category of fixed annuities. It represents the deposits in a period of accumulation, is the product of disbursement thereof. The third category is a product that combines fixed annuity and segregated funds.

Fixed annuities and combinations are the odds

On the side of the fixed annuity (term deposits), sales increased by 17% in the third quarter of 2018, compared to the same quarter of 2017, to reach $ 514 million dollars (M$). In the period from 1 January to 30 September 2018, sales of fixed annuities increased 13 % compared to the same period of 2017 to reach$1.6 billion.

The sales of the products that combine segregated funds and fixed annuities increased 5 % in the third quarter of 2018, compared to the same quarter of 2017, to reach $ 784 M$. In the period from January 1 to September 30, 2018, the sales of these combinations are the increase of 7 % compared to the same period of 2017. They amounted to$2.6 billion.

Where is the money going ?

During the first three quarters of 2018, the sales of segregated funds in terms of premium split 42 % to the fund RRSP, 32 % to the non-registered funds, 11 % to investment funds registered retirement income fund (RRIF), 10 % to the accounts tax-free savings (TFSA) and 5 % to the life income fund (LIF).

During this period, sales of fixed annuities were directed 60 % to the immediate annuities. The rest of the premiums sold are allocated among the term deposits in accumulation (35 %), and the category RRIF/LIF (5 %).

Premiums resulting from sales of products combined are massively directed to the segregated funds (86 %). The other 14 % went to fixed annuities.

Active stable

At the end of the third quarter of 2018, the total assets of the annuity in Canada was a little over of $ 139.1 G$. The evolution of the asset remains stable : in the 3rd quarter of 2018, it has decreased to less than one-half of 1 %, compared to the second quarter of 2018.

Read or reread the accounts of the of the insurance Journal reports on sales of individual life insurance and on sales of critical illness insurance to LIMRA.

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