First Union Corp., already one of the industry's largest mutual fund managers, is gearing up to launch its own variable annuities.
The Charlotte, N.C, financial institution will link its annuities to at least six of its mutual funds, said William M. Ennis 2d, senior vice president and director of First Union's mutual fund program.
The products are expected to be available by next April, once all regulatory approvals are obtained, Mr. Ennis said.
Lieber & Co., the $3.1 billion-asset fund-management firm that First Union purchased earlier this year, will manage three of the annuity portfolios.
First Union's in-house money-management arm plans to oversee three others.
Variable annuities are insurance contracts that invest in mutual funds to offer consumers tax-deferred returns.
Nationwide Insurance will underwrite First Union's annuity contracts, a process off limits to banks.
The Columbus, Ohio, insurer also recently signed as partner to Banc One, which is rolling out its own annuities next month.
First Union's annuities will offer investments ranging from a money market portfolio to a growth and income fund.
First Union is also rolling out an international-equity fund and an emerging-market fund next month for its retail customers, and will choose one of these offerings to include in its annuity, Mr. Ennis said.
With $6.9 billion of fund assets as of June 30, First Union ranked as the nation's seventh-largest bank manager of mutual funds, according to Lipper Analytical Services, Summit, N.J.
The annuities will allow the banking company to get further mileage from the funds, by letting customers invest in versions of them, Mr. Ennis said.
The annuities "will be an important asset gatherer for us," he added. Mr. Ennis said the asset growth will translate into greater fee income.
At the same time, by having its own products First Union will have greater control over design and pricing, he added.
