Royal Bank of Canada (RY) may consider selling guaranteed retirement cash-flow products in its bank branches if Canada’s regulator rejects an insurance industry challenge to keep banks from selling the investments, the lender’s head of insurance said.
The Office of the Superintendent of Financial Institutions has been reviewing Bank of Montreal (BMO)’s BMO Lifetime Cash Flow product, which gives buyers age 55 and older guaranteed payments for life. Bank of Montreal launched the investment in January, drawing complaints from Canadian insurers that call the offering an annuity that they say violates federal rules barring banks from selling insurance in bank branches.
“It’s a very needed offering,” Neil Skelding, chief executive officer of RBC Insurance, said today in an interview in Toronto. “Certainly, we’d like to fulfill that need if possible at the retail branch.”
OSFI spokesman Rod Giles in Ottawa said the issue is still under review.
Royal Bank is waiting for OSFI to clarify the rules before considering whether it would enter the market, Skelding, 48, said.
“Until there’s some certainty around that, it would be uncharacteristic of us to launch into a market,” Skelding said.
Royal Bank offers payout annuities through its 53 insurance stores, which are kept separate from bank branches.
Royal Bank’s insurance unit reported record earnings of C$601 million ($592 million) for the fiscal year ended Oct. 31, representing about 9 percent of the Toronto-based lender’s profit from continuing operations.
To contact the reporter on this story: Doug Alexander in Toronto at email@example.com