Doug Brooks, the new CEO of Transamerica Life Canada, admits the timing has worked out pretty well. After the most precipitous drop in the S&P/TSX composite index in decades, the Toronto-based insurer launched Five for Life, its long-awaited segregated fund with a guaranteed minimum withdrawal benefit, in late November.

Had the product launch taken place a few weeks earlier, Transamerica would have been on the hook to policyholders for the difference in the value of their contractual guarantees and the lower value of the equity assets. Former CEO Paul Reaburn, who has since joined Transamerica in Asia, had announced the product launch six months earlier.

But Brooks, an actuary by training who arrived at Transamerica from Waterloo, Ont.-based Equitable Life Insurance Co., for which he was chief financial officer, says Transamerica was doing its due diligence on a hedging program that would reduce its risk exposure. Transamerica wanted to make sure it could begin hedging as soon as it started selling policies. If the insurer had not been able to develop the right strategy, it would not have launched the product.

“That’s what took a significant amount of time; it resulted in the timing,” says Brooks. “But, certainly, it’s better not to have the extra business [that Transamerica would have obtained had it launched its GMWB product earlier in the year] on the books.”

Perhaps, there’s some karma in Trans-america’s delayed product launch being of benefit to the firm. Brooks, 56, takes the helm of a company that’s emerging from a whack of bad luck — although everyone admits bad risk management also had played a part.

In the late 1990s, Transamerica launched its original seg fund products ahead of the technology bubble. The array of funds sold well — and then the bubble burst. Almost 10 years later, the insurer is still paying for that mistake as, starting next year, Transamerica begins to pay out guarantees tied to those products.

Transamerica, whose parent is AEGON Americas, the unit that ultimately reports to Netherlands-based AEGON NV, reported a net loss of more than $167 million for the quarter ended Sept. 30, 2008. Transamerica hasn’t reported a quarterly profit in more than 18 months. AEGON has injected cash into its Canadian unit several times in the past few years to maintain regulatory capital levels and its own reserves. Past risk-management performance and reserve issues have led financial rating agencies Standard & Poor’s Corp., based in New York, and A.M. Best Co. , based in New Jersey, to downgrade Transamerica’s debt several times.

As Reaburn did, Brooks admits that Transamerica’s old seg fund product was poorly designed and that the company has gained an education from its experience.

“There has been a lot of learning for us, and the industry as a whole,” Brooks says, “in understanding the risks that were underpriced throughout the industry in Canada and the U.S. in the 1990s.”

He adds that Transamerica wants to put that all in the past as quickly as possible and gain back the trust of the marketplace. But, he acknowledges, that will come only with execution and performance.

“It’s important for us to get the rating increased again,” Brooks says. “We believe we’ll do that, given the initiatives we have in place to manage capital and earnings. We’re confident it will happen, and it’s important to us that it does. But we have to demonstrate that through actions and results.”

With Five for Life, Brooks is presiding over the launch of a product type that’s taking the Canadian investment marketplace by storm. Toronto-based Manulife Financial Corp. has amassed about $6 billion in sales in the GMWB product category in the two years since it launched its product, IncomePlus GIF. Sun Life Financial Inc., also of Toronto, has followed suit. Since then, several other insurers have presented their own versions.

Brooks says 84% of all seg fund sales in 2008 were in the GMWB category, and not having such a product had hurt Transamerica’s sales. “Among insurers,” he adds, “it’s the product in the marketplace that we can offer and others can’t.”

Five for Life, like other GMWB products, offers an annual guaranteed benefit after the age of 65. The policyholder’s original deposit begins paying out at a 5.5% annual rate as long as the policyholder doesn’t exceed his or her guaranteed withdrawal at any point. The policyholder gets a bonus if he or she waits before withdrawing, and can also lock in gains from equities markets, should they occur.

@page_break@Brooks, a long-time resident of Ontario who was born in the Kitchener-Waterloo area, the heart of Canada’s insurance industry, worked at Clarica Life Insurance Co. (then known as Mutual Life Assurance Co. of Canada, prior to its demutualization in 1999) before Sun Life bought it in 2002. He then became Sun Life’s chief risk officer until 2006, when he made the move to Equitable Life, one of the few mutual insurers left in the country.

Brooks attended the University of Waterloo and studied mathematics and actuarial science before taking the job at Mutual Life in 1976. He spent most of his time with that insurer on the individual life product side, designing and pricing policies.

The industry has changed a lot since the days when many smaller mutual insurers shared the Canadian market, Brooks says. Winnipeg-based Great-West Lifeco Inc., Sun Life and Manulife in Toronto now dominate, he says, but there’s room in the field for Transamerica to have a strong presence.

Although Transamerica has spent the past few years wrapping its arms around its reserve problems, Brooks sees the firm gradually emerging as one of the insurance industry’s dominant players.

“I saw it as a great opportunity for myself,” he says of his new position, “and also an opportunity for the company.”

That said, Brooks is not promising advisors and distributors a big splash. He brings a lot of relevant experience in controlling spending to his new role, and notes that Transamerica has not followed some of the industry in offering lower-term insurance rates because it may not be able to do so profitably.

On the marketing and distribution side, spending will follow the sales results, he says. “Obviously, to some extent, it’s circular. But we’ll put the resources where we need them,” says Brooks, who has already gone on a cross-country road trip to introduce himself to Transamerica’s sales force. “We will be careful in managing expenses, but we want to put resources where we think they will be most effective.”

Today, Brooks lives in a rented condo near the insurer’s head office in north Toronto. When his daughter from his second marriage finishes high school in Kitchener, he and his wife will move their household to Toronto. (A son from Brooks’ first marriage is working in the insurance industry as well, in business development at Sun Life.) In the meantime, Brooks commutes among Toronto, his home in Kitchener and a winterized cottage in Huntsville, Ont., where he enjoys cross-country skiing. IE