As variable annuity sales slumped in 2009, the U.S. division of Sun Life Financial sharply increased sales of the product and the firm said it plans to take advantage of market dislocation in 2010.

Jeffrey Grant, an executive vice president and director of sales for Sun Life Financial Distributors, Inc., in Boston said that he expects to be a “top-five player” by the end of 2011. Sun Life was the ninth-biggest seller of new variable annuities in the third quarter, according to the Morningstar Annuity Research Center, jumping six spots from the previous quarter. Its variable annuity assets rose 16% during the third quarter. Its $1.08 billion in third-quarter variable annuity sales translated into a 3.5% market share, according to Morningstar.

For the first nine months of the year, Sun Life’s variable annuity sales rose 64% from a year earlier, according to the company. By comparison, industry-wide sales of the products fell 22.9% during the same period, according to Morningstar.

Grant credits several factors for Sun Life’s success.  Foremost among them is the fact that many of its competitors in the variable annuity field have scaled back their efforts.
“Many competitors have changed substantially or pulled out of the business,” he said.

That allowed Sun Life to fill the void, and it also produced a crop of available sales talent that the company used to expand its ranks.

Last year was one in which many variable annuity providers members backed away from or modified their living benefit guarantees,  said Doug Dannemiller, a senior analyst at research firm Aite Group. “They’re retrenching,” he said.

Many rivals have also downsized their sales forces as variable annuity sales slumped, Dannemiller said. The products accounted for $48 billion of sales in the second quarter of 2007, but just $32 billion by the third quarter, according to Limra International.
Industry-wide layoffs allowed Sun Life to add about 50 wholesalers last year, including 10 for the bank channel, Grant said.

“We had the opportunity to add people from high-profile companies,” he said. “A lot of people were displaced and looking for jobs, and a lot of them came to us.”

Experienced sales professionals are especially important when their relationships can help a new employer get a foot in the door at new distributors; the new talent has helped Sun Life to gain new selling agreements at several banks, Grant said.

Over the past few weeks, Sun Life has added selling agreements with Wells Fargo & Co., Bank of America Corp. and TD Bank, he said. It has 225 selling agreements with banks, according to a Sun Life spokesman.

“When a bank decides to bring on a new partner, they run it by the advisers in the field for feedback,” Grant said. “If we have new wholesalers who have worked with these folks previously, that goes a long way.”

Another key to Sun Life’s success came early in the year when it trimmed its variable annuity product lineup to eliminate several products that were largely redundant, Grant said.

For instance, at the beginning of last year, Sun Life offered eight versions of its living benefits; it pared the living benefit options down to two. “It was a very confusing story, to be quite honest,” he said. “We really simplified it and made it more adviser-friendly and easier for clients to grasp.”

Having a more focused product lineup is smart, Dannemiller said. The last thing advisers want is to be unable to answer a client’s question about subtle differences between products, he said.
Sun Life’s initiatives could continue to pay off if variable annuity sales rebound. And that’s what Dannemiller expects to happen.

Mass affluent investors are doing more saving than investing these days. But advisers in coming months will be talking to clients about how to protect the assets they have and how to position for future growth, Dannemiller said.

“For the mass affluent market, annuity products are a good way to do that,” he said.
Also early last year, Sun Life reorganized its sales approach, creating a dedicated relationship management team. The team works with the back offices at major distribution partners, focusing on new selling agreements and working existing partners on areas like joint marketing, referral training and adviser education.

The duties of the relationship management team used to be handled by an executive who also oversaw Sun Life’s team of wholesalers.