This year Canada Life International's Tony Parry takes the company into its 20th year, and, as Keren Holland discovers, there are no plans to steer it from its current path
When it comes to revealing the ambitions of Canada Life International (CLI), Tony Parry does not hold back. As managing director of the Isle of Man-based business, Parry is adamant it will remain solely focused on the UK market until it consistently achieves number one among its offshore counterparts.
While other international life companies are increasingly looking to markets such as the Middle East and Asia, Parry believes there is still plenty of potential for growth in the UK. He says: "We have looked at those areas in the past, but at the moment the plans are on the shelf. I suppose the international markets are not seen as high a priority for us at this stage.
"What we want to do is make sure we have got our proposition right in the UK, we are continually developing our product range and our service proposition. Once we have got to the stage where we feel comfortable we are number one, we are consistently number one and we have saturated the market, then it will be time to start looking at these other markets. But at this time the UK is our main focus because it still has so much potential."
CLI, which is a subsidiary of the Great-West Life Assurance Company, is celebrating its 20th anniversary this year. It took the life company 12 years to reach its first billion of assets under management, but since then growth has accelerated. In 2003, it reached £2bn, in 2005 it was up to £3bn and by 2006 it had hit $4bn. Already this year, it has already passed the £5bn mark.
Parry attributes the growth to two aspects of its business, the IFA market in the UK and institutional business, which is also a major focus for the company. Around 60% of its business is on the retail side, while the other 40% is based on institutional business. Parry says: "We would look to maintain that ratio but with a focus on growing both elements of the business more than the market growth. We are very focused on the IFA market but I think we can keep both plates spinning and concentrate on both aspects of the business."
Parry admits the institutional side is not as lucrative as the retail side, but says it is still worthwhile. He explains: "We are working with family offices, private banks and the private client divisions of some of the major banking institutions to develop products and funds for those organisations. The margins are tighter on the institutional business but we are dealing with much larger case sizes. CLI has never sold anything at a loss, everything we do is costed out, we are very slick on our finance side and we know exactly how much money we can make on individual pieces of business. It's about getting scale and we have achieved that because of the service we are offering to these organisations."
Parry says another aspect of CLI's success has been its ability to keep staffing levels down. It has around 120 staff, and has been consistent at that level for around three years. He says: "I think we are probably the envy of other life companies that have considerably more staff and are possibly smaller in size. The reason we are able to maintain those staff levels is that we have invested quite heavily into our systems so that a lot of the processes that happen around the business are automated."
CLI also shares its sales force with its onshore parent, having moved away from having a separate sales force because of duplication. He says: "Canada Life employs our sales force and we are charged an amount for its services. We did have our own sales force up until two or three years ago that sold exclusively Canada Life International products but what we found was there was a doubling up in resource in a number of areas."
But while CLI has managed to keep its costs down in some areas, Parry admits it is an increasingly competitive market, and there is more it can do. He says: "The challenges for us will be to grow in a market that is very competitive, to continue to provide the service, to develop our electronic platforms for online valuations, dealing and other policy transactions. We have a major programme running in the background at the moment that is investing tens of millions into that side of our business and, over the next 12 months onwards, things will be rolled out into the market that will provide additional support to both IFAs and policyholders. Being able to make ourselves easier to deal with is a key strategy for CLI."
Parry believes life companies that have moved into the international arena recently, such as Legal & General, may find it hard to gain a foothold and compete against established players who have well developed systems and products. He says: "New companies coming in, to get that level of expertise within their staff and also to get the systems to be able to manage a new route in, will find it difficult. The market is very competitive at the moment so unless they have a very slick process and an offering which supports the market, they are going to find it very difficult from a financial point of view."
Going forward, CLI is working on a number of initiatives in its bid to establish itself as the top international life office selling products into the UK. He says: "We are currently developing a product range and the first parts of that proposition will launch into the market before the end of 2007. It will not be a new proposition, but it will be the way we conduct the transactions that will be unique." n
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