Sun Life scraps Clarica brand

It’s the end of the line for the last vestiges of one of Canada’s oldest insurance companies. The identity Clarica Financial Services, a subsidiary of Sun Life Financial, is being phased out and replaced with the Sun Life brand.

Formerly Mutual Life of Canada, Clarica can trace it roots back to 1870. The Waterloo-based company changed its name to Clarica after it demutualization in 1999, and became a publicly traded company.

In 2002, Sun Life purchased Clarica for $6.7 billion CDN but, rather than integrating the brand, ran it as a distinct subsidiary. Combined, the two companies created a regional insurance juggernaut, and Sun Life became one of North America’s largest insurance companies based on market capitalization.

The Clarica brand has served Sun Life well. Kevin Dougherty, president of Sun Life Financial Canada, says that Clarica and its 3,500-strong sales force has functioned as a major distribution generator for much of the company’s individual life insurance sales.

“The way that we have used the Clarica brand since integration was to brand our career advisors system. So the 3,500 or so career advisors that we have across Canada — they are focused on selling the company’s products, some of which were branded Sun Life and some of which were branded as Clarica. All of it was underwritten and backed by Sun Life Financial,” Dougherty says. “Clarica has really been a distribution brand as opposed to an insurance company brand since we did the integration.”

The elimination of the Clarica brand allows Sun Life to keep its individual distribution network, while achieving some other key marketing goals, including streamlining its marketing budget for things like media, advertisements and sponsorships. Dougherty says that using Clarica’s distribution network to build up Sun Life’s individual product profile is of strategic importance as well.

“This is really all about business strategy. Number one, we’re trying to raise the profile of the company, so pooling our marketing budget together helps us to do that,” Dougherty says. “Secondly, we’re continuing to try to build up our career sales force, and Sun Life is really a global employment brand, and we believe this will help us grow our career sales force even more quickly.”

Bulking up the sales force is particularly important with the fast-approaching retirement of boomers. As an industry leader in group plans, Sun Life wants this brand recognition to be transferable to individual products for retirees leaving those group plans.

“We see a great opportunity to leverage our industry-leading group businesses as members of group plans leave these plans to retire. The baby boomers are all in the home stretch of retirement. It will be easier to pass the customers across to our individual business if we have a unified brand strategy,” Dougherty says.

To fill the demand for this potential transfer of customer base, Sun Life is hoping to tap Clarica’s sales expertise in the field. Dougherty is adamant there will be no employee displacement with the re-branding — in fact quite the opposite: Sun Life wants to tap into Clarica’s system of recruiting and training of career life insurance agents.

“This move is really about raising the profile of the company. We’re very focused on that. We’re also very focused on building up our career sales force as well as our multi-channel strategies and group business,” he says. “So, this doesn’t change our relationships with our advisors at all, but we do believe it opens up quite a few new opportunities to achieve synergy.”

Sun Life said the branding transition will be completed by the first quarter of 2008 and will be supported by an increased investment in the Sun Life brand. The change will not impact client service, advisor operations, existing policies, investments or current product offerings. The cost of the move is estimated at $40 million.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com