insurer Aegon on the future of its wholly-owned Canadian unit
Transamerica Life Canada (TLC) has concluded that it represents “a
solid foundation for a successful presence in the Canadian
marketplace.”
However, to meet what Aegon termed its “profitable growth
objectives”, TLC’s business model is to be revamped with key
objectives including improving efficiency of operations and
reducing Aegon’s capital allocation to the Canadian market. At the
end of 2007 TLC’s shareholder equity stood at C$964.3 million ($894
million).
Go deeper with GlobalData
Tasked with the restructuring is Douglas Brooks, who was appointed
as TLC’s president and CEO in September this year. Brooks’ previous
positions in Canada’s life industry include that of CFO of mutual
insurer Equitable Life of Canada.
Founded in 1927, TLC is Aegon’s main operating unit in Canada and
holds top-five positions in universal life and term life insurance,
and holds a top-10 position in the segregated funds market. TLC’s
net segregated fund assets totalled C$4.95 billion at the end of
2007.
TLC’s primary marketing channel is a national network of 18,000
independent advisors which in 2007 generated total premium income
of C$464 million, down 2.6 percent compared with 2006. Lower
premium income was attributable to a sharp fall in annuity
premiums, down from C$60.6 million to C$31 million. Life premiums
increased by 4.1 percent to C$433 million.
Overall TLC’s performance in 2007 was well below that of Canada’s
life industry which, according to reinsurer Swiss Re, recorded a
13.2 percent increase in premium income in 2007 to C$48.97
billion.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataAegon will clearly also be looking for a significant improvement in
profit performance from TLC, which in 2006 reported a marginal
profit after tax of C$23.55 million representing a return on
year-end equity of only 1.9 percent.
TLC’s performance in 2007 was even more unsatisfactory, with a loss
after tax of C$307.2 million reported. In addition to a sharp fall
in net investment income – from C$304 million to C$18.2 million –
TLC’s results were also adversely impacted by a C$105 million
provision related to excess management fees that TLC noted “may
have been charged to [variable annuity] segregated funds” in
previous years.
TLC added that it remains uncertain which existing and former
policyholders may have been affected.
