Standard Life Canada aims to finish a hiring campaign by the end of the first quarter to help it recover from more than a year of poor sales after a shift in its strategy.

“We are reinvesting a lot into our distribution support for advisors in the regions with new sales managers,” says Denis Berthiaume, senior vice president of retail markets for Montreal-based Standard Life.

The firm plans to hire an additional 25 sales and service representatives across the country by the end of March, says Berthiaume. Although the new positions will be focused in Ontario and Quebec, Standard Life may employ an additional eight or nine positions in each of the east, west and central regions, bringing the firm’s total to about 100.

“The approach is to have more people on the ground delivering the value-added programs to advisors to help them grow their businesses,” Berthiaume says.

Standard Life is still in a transitional phase, but when it emerges from it, he says, advisors will “know that when they sell a product with us, they will be a business partner for a long time.”

If that was the message through the transition, it was not getting through to advisors, according to people who used to work for Standard Life and industry consultants who watched Standard Life struggle with a restructuring.

In fact, the hiring spree reverses several rounds of layoffs and wholesaler departures during a time of upheaval for Standard Life’s Canadian business. It had been underway since 2005, after its Edinburgh-based parent company, now Standard Life PLC, made the decision to demutualize. It did so in September 2006.

For Standard Life Canada, the changes included a switch in focus from straight-up insurance sales to wealth-management and retirement-planning products, putting the unit more in line with its British parent. The main casualty of strategic change was Standard Life Canada’s most popular, but unprofitable, line of universal life, one that the firm has backed out of completely.

Standard Life deliberately raised premium prices by up to 40% for its level cost-of-insurance UL product, it’s No.1 selling product. Berthiaume says that for Standard Life, as with many Canadian firms, this type of UL product was simply not profitable. “We were losing a lot of money in our level COI sales, which at the time, represented 85% of our sales,” he says. “We were in a market in which we didn’t want to be.”

As a public company accountable to shareholders, Standard Life PLC could not support such a product, which is capital intensive, from an underwriting point of view. Public insurance companies tend to aim for 10%-15% profitability on products.

Standard Life says it knew it would suffer from the decision to back out of its No.1 life product and that, to some extent, it would affect other sales. “When you re-price one product, it will have an impact on our overall product sales because some advisors will want to sell both jointly,” says Berthiaume, who was not with Standard Life when the company made the decision.

Berthiaume would only say that now the UL product represents only 25% of its sales, down from 85%. The company would not release past or current sales amounts on any specific product lines.

An exacerbating circumstance was Standard Life’s review on sales practices on its yearly renewable term UL product. Across the industry, all manufacturers know the product can attract poor sales practices from advisors. They sell the product and help fund the client’s premium payments with the generous commissions they receive from the manufacturer — with the tacit understanding that the client will back out of the product months later to have their premiums rebated.

“Maybe some advisors were not happy because questions were asked about abuses,” says Berthiaume. “Does that explain a big change in sales? I’m not sure it has a big impact. These things occur on a regular basis as part of our organization.”

In any case, to understand the damage it inflicted on itself, Standard Life PLC’s year-over-year, nine-month sales report from the end of October 2006 tells the story.

Overall, sales in the Canadian business were down 27% to £855 million (about $1.7 billion), led by group savings and retirement sales, on which two lost contracts had a big impact. There was more incremental recession in sales in individual insurance, savings and retirement product sales, which had been down 19% to about $960 million.

@page_break@Byren Innes, senior vice president and director NewLink Group Inc. in Toronto, says Standard Life didn’t do a good job of managing its own message in the early stages of the restructuring. In absence of a clear message from Standard Life, the competition made hay, he says.

“People saw them firing people and raising prices, so they figured they weren’t in the marketplace. And if you’re Manulife [Financial Corp.] or Canada Life [Assurance Co.] and you’re competing, you say ‘They’re gone’,” says Innes. “You could have written a script on how not to do something, and you wouldn’t have missed any of these beats.”

Innes, along with others on the inside who witnessed the ball roll out of control at Standard Life, says the firm is now repairing the damage. “Its group sales and pension lines are doing very well,” he says. “Standard Life is putting it back together. It was always a matter of adjustment.”

Berthiaume, who has been at Standard Life for nine months, says the message could have been managed better, but it’s hard for him to judge in retrospect.

Standard Life PLC announced some Canadian sales growth in September 2007. And, although Berthiaume was mum on full-year sales details, the parent company says: “A further increase in sales levels is expected in Q4 as we continue to rebuild our sales capacity and increase our presence with wealth-management distributors.”

In the meantime, advisors keen on Standard Life’s UL product will have to change their expectations — and they’ll also have to wait a little longer. The firm is in the process of evaluating its entire UL product line, says Berthiaume, who could not say how long it would take.

“We have some solid products on the shelf, but on other products, we think they can be improved,” he says.

Berthiaume emphasizes that although life insurance will be part of the firm’s lineup, it will no longer be a focus.

For now, Standard Life is content to be marketing several new segregated funds, which it launched last fall, along with a low-fee Platinum product for investors who have $250,000 or more to invest.

Other product announcements are forthcoming. In June, the firm will add still more global fund management to its stable of seg funds, leveraging from its asset-management arm in Britain.

The insurer will make a decision soon on its interest in the so-called “guaranteed minimum withdrawal benefit” option, Berthiaume says. IE