While most competitors are running from variable annuities, the U.S. division of Sun Life Financial Inc. is looking for ways to increase sales of the product through banks.

Sun Life Financial Distributors Inc. announced Wednesday it hired Leslie Hunnicutt as a senior vice president and a national sales manager in its bank channel.

The Wellesley, Mass., based unit vaulted into the top ten providers of annuities through banks last year, she said, as it increased variable annuity sales 22% in the channel last year.

The company’s goals for 2010 are simple – continued growth through a segment most competitors have abandoned. Hunnicutt, who was the managing director of SunAmerica’s Retirement Markets group before being hired at Sun Life, said it has been working to increase its bank distribution of variable annuities. Sun Life has 19 wholesalers in the bank channel, up from 15 a year earlier, and plans to add another this year.

“We want to be a top five player overall,” Hunnicutt said in an interview Thursday. “The players in this game have changed as many insurance companies have decided to get out of variable annuities and move to fixed. That plays well for Sun Life. We have a tremendous focus on VA sales.”

Analysts said that fixed annuity sales heavily outweighed variable annuity sales last year as many banking companies shied away from variable products because the guarantees associated with these products became too expensive, according to Michael White of Michael White Associates.

The strain that the market crash put on guaranteed-income rider providers is behind much of the change. Many providers have eliminated guarantees or raised their prices.

Second-quarter figures from the research firm Kehrer-Limra showed that variable annuity sales rose 17% in the quarter, compared with the first quarter, well behind the 55.9% gain posted by mutual funds. The disparity is striking, because sales of the two products usually move in tandem.

In fact, the net sales of variable annuities has halved to $23.8 billion in 2008 from $46.8 billion in 1999.

Lisa Plotnick, the Cerulli analyst covering annuities, said the industry has gone from "a low rate to an alarmingly low rate" over the last five years for a variety of reasons one of which is that the sheer complexity of the products made advisors tune out instead of keeping up with constant changes in benefit provisions.

But if the sector is a sinking ship, why does Sun Life remain focused on it? Hunnicutt said unlike many competitors, it “didn’t have the hiccups and losses” that many competitors faced.

“We priced our products correctly and hedged the benefits so we didn’t have the issues that the competition did,” she said. “We are a conservative company. We didn’t offer any crazy riders or benefits and we are priced appropriately so clients and brokers don’t have problems in the future. … There really is no magic to this.”

“We are in a new business development push,” Hunnicutt said. “We are focused on bringing in new banks. If you look at banks, many are reviewing their VA lineups for various reasons. Variable annuities are products that must be sold. We are working to train more brokers, clients and branch managers.”

Sun Life is approaching more large and regional banks that it doesn’t currently sell its products through.

Hunnicutt said the company is increasing its advertising and marketing efforts by beginning to advertise through the Bank Insurance Securities Association and by hosting insurance roundtables.

“We have to grow our banking relationships, not just take share away from competitors,” she said. “Last year was a great sales year for us, and we are in the top 10, but that just means that nine other carriers are doing better than we are. We have a great opportunity to keep moving up.”

Income earned from the sale of annuities at bank holding companies rose 2.5% to $2 billion in the first three quarters of last year from the same period a year earlier. According to the Michael White-ABIA Bank Annuity Fee Income Report, which was released last month, third-quarter annuity commissions rose 12.9% to $669.8 million from the previous quarter.

SunLife isn’t alone. Some companies remain committed to variable annuities despite market trends. MetLife Inc. introduced a simpler variable annuity products that is designed to be easier for bank representatives to explain and sell. The targeted buyers, individual investors at or near retirement, want products with a guarantee, he said, similar to a certificate of deposit.