Banks become hot target for insurers' annuity sales

Sep 5, 2006 @ 12:01 am

By Gary S. Mogel

NEW YORK - Life insurers are adopting a "no annuity gets left behind" strategy in selling through bank branches, according to industry marketing executives.

Not only are insurers getting their foot in the door at additional banks, they are also adding variable products to the relatively simpler fixed products that have traditionally anchored bank annuity offerings.

In fact, a shift to variable products from fixed is occurring at banks, according to first-half statistics from LIMRA International Inc. in Windsor, Conn.

Insurer sales of variable annuities through banks was up 28% to $11 billion, from the amount the comparable period a year earlier, while fixed-annuity sales were down 24% to $9.1 billion.

MetLife Inc. in New York reported that two-thirds of annuity sales this year have been of variable products, a complete reversal from fixed annuities' 2-to-1 advantage last year.

Bank clients targeted

Jackson National Life Insurance Co. in Lansing, Mich., last month expanded its relationship with Wachovia Corp. to sell variable and fixed (including equity index) annuities in bank branches. Previously, Jackson sold annuities through Wachovia's broker-dealer network, but not in the Charlotte, N.C.-based company's bank branches.

"We hope to become a top-five product provider within the Wachovia network," said Greg Salsbury, executive vice president of Jackson. He is also the moderator of a new video designed to familiarize Wachovia bank advisers with Jackson's annuity product line.

Jackson is making a special effort to train Wachovia's bank advisers on the nuances of its equity index products, according to Tori Bullen, senior vice president of the insurer's institutional marketing group. "We developed a test that is given to bank reps to be certain they have digested the fixed-index-annuity-product information," he said.

Protective Life Insurance Co. in Birmingham, Ala., is expected to buoy its sales of annuities - especially fixed annuities - as a result of its July acquisition of New York-based Chase Insurance Group, according to Protective vice president of national marketing Eric Miller.

"We have ramped up our bank marketing efforts in general and are seeing significant growth in other banks, as well," he said.

"Everyone may not have a broker, but just about everyone has a bank," said Paul Sylvester, head of annuity sales for MetLife. Banks have entered the fray to give boomers and others advice on accumulation and distribution, he said. "Banks have a tremendous clientele in both numbers and net worth," Mr. Sylvester added.

MetLife has about 30 major selling agreements with banks and is seeking more, he said.

"We just had a 35% adjustment in our wholesaling team, bringing in new folks from outside with strong VA experience, in order to service the bank channel," Mr. Sylvester said. "We're expecting a 30% increase in sales within the next year," he added.

"Historically, our success in banks was in the fixed arena, but so far this year, 65% to 70% of sales have been variable annuities. Last year, 65% to 70% of the annuities we sold were fixed annuities."

MetLife does not offer an equity index annuity.

EIAs offered selectively

But banks are not shying away from EIAs, which have developed a reputation for being complicated and having high fees and commissions. EIAs also have an uncertain regulatory future, with Washington-based NASD and the state insurance departments seeking to regulate them.

"Banks are looking at the full menu of EIAs and picking the ones that are most client friendly," said Ann Hughes, senior vice president and head of business development at the annuity distribution division of Atlanta-based ING U.S. Financial Services. "They are staying away from the products with high surrender charges and adviser compensation that is too aggressive."

ING recently increased the number of wholesalers serving the bank channel to 25, from 16, and made annuity growth through banks its No. 1 initiative, Ms. Hughes added. The relationship is symbiotic, as the insurers need a conduit to a so far lightly tapped pool of potential clients, and the banks need other products to offer in addition to certificates of deposit and other traditional bank investments, she noted.

One possible sticking point is that bank advisers may have to obtain additional licenses to sell some of the annuities. An insurance license is needed to sell fixed annuities, including EIAs, and a securities license is required for VAs.


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