Bank Annuity Sales Fuel Big Gains for Insurer

Fast-paced annuity sales at banks helped to drive up Western National Corp.'s second-quarter earnings.

The Houston-based annuity and insurance company sold $440.1 million of fixed annuities during the quarter, compared to $154.4 million in the second quarter of 1995. Its net income rose 125%, to $21.4 million.

Michael J. Poulos, Western National's chief executive, said sales agreements with banks have become the "stronghold of our growth strategy."

Annuity sales through banks accounted for 83% of Western National's volume in the quarter. The company booked $366.5 million through banks, nearly three times what it sold through that channel in the 1995 quarter.

Western has carved a niche for itself by developing branded fixed annuities for financial institutions, including big banking companies such as First Union Corp. and First of America Bank Corp. Most recently, it announced a proprietary fixed annuity planned for First Commerce Corp., New Orleans.

Bank-brand annuities now account for 67% of Western's financial institution sales.

Kenneth Kehrer, a Princeton, N.J., consultant, said Western has attracted a lot of new business because it lets banks manage the money in proprietary annuities. That is something "other competitors have been unwilling to let banks do," Mr. Kehrer said, because it digs into their profit margins.

Mr. Kehrer said Western National was ranked seventh last year among annuity vendors in terms of total sales. He added that preliminary projections show the company had the biggest sales increase of any annuity vendor during the first half of 1996.

Western's proprietary annuity program got off the ground late last year and is only now beginning to bear fruit. Company executives declined to say what percentage of second-quarter earnings came from proprietary annuity sales.

"The earnings contribution from our proprietary business is small right now," Mr. Poulos said, "but should grow rapidly as that business matures."

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