Jefferson-Pilot Corp. has never been much of an annuity seller in the bank channel, but a hiring this month could mean the Greensboro, N.C., company is going to try again.
Jefferson-Pilot said it has hired Robert Wick to head its annuity and life insurance distribution through banks. Mr. Wick had been running a bank-insurance consulting firm, RVW Consulting Inc., in Davidson, N.C. He started at Jefferson-Pilot last Monday with the title of vice president of financial institution marketing.
The company has targeted banks in the past as a distribution channel for its annuity and life insurance products but has yet to really crack the market. In the late 1990s it tried to push into banks, and in 2001 it started a market-value-adjusted annuity sold through banks. It started to sell a bit through Bank of America Corp., and in 2000 it also began to sell life insurance for middle-market and high-net-worth bank customers.
But none of this produced big results. Kenneth Kehrer Associates, a Princeton, N.J., consulting firm that tracks annuity sales through banks, reported that Jefferson-Pilot had $37 million of fixed annuity sales through banks in the second quarter, ranking it 23d in this category.
It did not report any variable annuity sales.
However, Mr. Wick said, the company can still find a niche. In an e-mail, Mr. Wick wrote that Jefferson-Pilot is "a unique company that is very intelligently run" and "can be a player with the right moves."
He did not specify what these moves might be and did not return phone calls seeking comment. Paul Mason, a spokesman at Jefferson-Pilot, said it is too early for Mr. Wick to talk about strategies. He added that the company retains a bank distribution business, but he had no updated sales numbers for the channel.
Experts have said that cracking the bank market is difficult because dominant players are already established in the channel. Some of the biggest providers of annuities and life insurance through banks - for example, Hartford Financial Services Inc., American International Group Inc., and Nationwide Financial - have been there for years.
Kenneth Kehrer, the consulting firm's president, said Jefferson-Pilot "has a shot but it is really uphill sledding." It is extremely difficult to overcome the entrenched competition for banks' limited shelf space, he said.
"The established companies work very hard to protect those bank relationships," Mr. Kehrer said.
It gets even tougher at the biggest banks, he said, where most annuity sales are made. Kehrer Associates said only 12 banks sell more than $1 billion of annuities each, and these relationships are fiercely protected. The top four banking companies among them make 29% of all annuity sales, he added.
These four are Wachovia Corp., Washington Mutual Inc., Bank One Corp., and Bank of America. Mr. Kehrer said the 29% includes in Bank of America's sales volume the annuity sales by FleetBoston Financial Corp., which Bank of America has a deal to buy.
Arthur Fliegelman, a vice president and senior credit officer in the life insurance group at Moody's Investors Service in New York, said Jefferson-Pilot is a solid company that banks should not ignore.
"Their insurance company is rated Aa2, which is excellent, and they have a good name, good credit, and very few companies are more consistent," Mr. Fliegelman said. "So on the fixed annuity side of the business, sure, they could sell a bit through banks. They do not do much of anything in the variable annuity market, though. They have a product; that's about it."
Mr. Fliegelman, however, questioned why any fixed annuity provider would want to sell more of the product, given the low current interest rates. Though rates have recovered slightly of late, they remain around 3%.
"Quite frankly, I don't see a compelling reason to sell fixed annuities," Mr. Fliegelman said. "If rates go up, you have to follow, or the customers will leave." In the meantime, he added, the insurer already has invested money from these sales in longer-term bonds and is stuck with small profits if rates go up.
"So why not wait until rates go up?" he asked.
Mr. Kehrer also said Jefferson-Pilot's ratings should help it but said the fact that it only sells fixed annuities could work against it. "Banks are trying to consolidate the number of providers they work with," he said, "so it is easier to stay inside the tent if you offer both products."
Jefferson-Pilot does have variable annuity products, despite not selling them through banks, so the possibility exists that it will begin marketing variables more aggressively through banks.
But other insurers' experience may be a warning. Many that have tried to get into banks in recent years have failed. Though Jefferson-Pilot may be at it again, no one has heard lately from Sage Group, the South African life insurer, which gave up after failing to make a dent in the bank channel in 2000-2001. Then again, Axa Group has gone from being a nonplayer to cutting a high profile in the last two years, Mr. Kehrer said.
