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Investor Economics

Insurance Advisory Service December 2016

After moving into the black in 2015, segregated fund net flows appear headed for another year in the red. The up and down fortunes of aggregate annual net flows have become a trend over the past decade. This aggregate trend, however, masks underlying sales dynamics occurring at the product design, asset class and distribution levels.

The December 2016 Insurance Advisory Service feature story Half-full or Half-empty: A 10-year Retrospective of the Segregated Fund Business is intended to provide our readers with a detailed, deconstructed perspective and context on the performance of the segregated fund business over the past decade. The feature provides an in-depth examination of the factors impacting the product segment’s growth.

At the heart of the overall sales performance of all segregated funds over the past ten years was the introduction of the guaranteed withdrawal benefit (GWB) product structure and its subsequent rise and fall from grace. Over the past few years, however, the ebb and flow of GWBs has mixed with a resurgence of traditional funds which experienced annual net inflows in 2014. Behind this was a movement by carriers to complete their segregated fund product shelves as they filled gaps in their asset class offerings and their guarantee structures.

Although the segregated fund business experienced a challenging decade, opportunity lies ahead on the horizon. The transition of the baby boomers into retirement, and their subsequent need for income and estate planning products, could align the demand curve in favour of segregated funds. The December 2016 feature story is a read not just for segregated fund providers looking for perspective on the past decade but for all those seeking insight into the opportunities and challenges of developing products in an ever-changing environment.

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  • Tags: annuities, insurance, Insurance distribution channels, MGAs, segregated funds

  • Date Posted: January 9, 2017