Robert Shore, the president of Allstate Distributors, said he wants to expand variable annuity sales through banks by adding bank distribution relationships as part of a drive to join the top three market players overall, from No. 17 in 2004.
"We want to climb up the ranks in variable annuity sales," he said in an interview, noting that Allstate already is a market leader - No. 3 - in fixed annuity sales through all channels, according to Limra International Ltd., a Windsor, Conn., life insurance trade association. "We now need to bring that success to the variable annuity space. We have to have the right product value proposition."
Allstate was the third-largest annuity seller through banks in the third quarter (the latest period for which data are available), according to Kenneth Kehrer Associates, a Princeton, N.J., consulting firm that tracks bank sales. It ranked 12th in variable sales and second in fixed annuities.
Allstate Distributors, a unit of Allstate Insurance Co. in Northbrook, Ill., has made no recent purchase, and distribution partnerships have been a key to its growth, Mr. Shore said. Two-thirds of Allstate Distributors' sales of annuities and life insurance come through financial institutions, including banks, he said.
Mr. Shore said Allstate wrote $1.3 billion of premiums through banks in the fourth quarter, compared with $831 million through in-house agencies and $798 million through specialized brokers.
Allstate's relationship with U.S. Bancorp has been especially successful, he said; the insurer had more than $1 billion of life insurance and annuity assets under management with U.S. Bancorp Investments and U.S. Bancorp Insurance Services by last July. And the assets related to Allstate products grew by $440 million from the end of 2002. Strong distribution and wholesaling support and joint marketing efforts led to the increase, he said.
When considering bank partnerships, Mr. Shore said, he wants to team up with organizations that have significant scale.
Last year Allstate had $15.9 billion of premiums and deposits, with 10% in variable annuities and 43% in deferred fixed annuities. Of the total, banks accounted for 26%, specialized brokers 29%, Allstate agencies 18%, independent agents 16%, and broker-dealers 11%.
Allstate considers its main competitors for fixed annuity sales to be AIG, New York Life, Nationwide Financial, and Genworth Financial, Mr. Shore said, and The Hartford is its biggest competitor in variable annuities.
Allstate's relationships with its bank partners and employees are what make the insurer stand apart from competitors, he said.
"Our mantra is to be memorable," he said. "In the world of wholesaling, there is a great sea of sameness."
Delivering new products helps Allstate stand apart from the pack, Mr. Shore said. Last month it introduced the SureIncome withdrawal benefit option for its Allstate Advisor Variable Annuity. The SureIncome rider, similar to one announced this week by Nationwide Financial, helps customers protect principal, pursue potential growth, and take withdrawal amounts of up to 8% of the principal per year.
Allstate also added seven subaccounts to its variable annuity product in October, he said, to give investors more choice. Lord, Abbett & Co. manages five of the subaccounts; Franklin Templeton and OppenheimerFunds manage the others.
