Aetna Life Insurance and Annuity Co. has designed a fixed annuity for sale exclusively through Amsouth Bancorp.
Hartford, Conn.-based Aetna expects $17 billion-asset Amsouth, based in Birmingham, Ala., to roll out the SecureSaver annuity this month in Alabama, Florida, Georgia, and Tennessee.
The product is a first for Aetna, which has proposals out to a dozen banks to customize annuities, said David Sanderford, vice president for financial institutions at the insurer.
Mr. Sanderford said Aetna sees its strategy of creating annuities for banks as a way to ensure that its products get top billing at bank brokerages.
"What I'm trying to do is build long-term relationships with banks so Aetna can have a predictable flow of premium," he said.
Amsouth declined to talk about the product, saying it has not yet signed a contract with Aetna. The contract is expected to close within two weeks.
The assets in the annuity are managed by Aetna, Mr. Sanderford said. The annuity contract lasts for five years with a guaranteed interest rate for the first year.
Also, Aetna allows Amsouth to change its compensation structure whenever it wants. And while most annuity contracts contain clauses that ban sales to people older than their late 70s, this one permits sales to customers as old as 90.
Finally, the insurer has agreed not to design annuity products for competitor banks in the four states where Amsouth is selling the product.
Since bringing Mr. Sanderford on board two years ago, Aetna, which holds $24 billion of assets, has been steadily building a presence in banks.
Last fall, Mr. Sanderford snared a selling agreement with Invest Financial Corp., a leading marketer of investment products to banks. Aetna also sells directly through a dozen banks, including First Bank System Inc., Minneapolis.
But training bank brokers takes a long time, so getting sales through banks takes "the gestation period of an elephant," he said. For 1996, Mr. Sanderford is striving for $200 million to $300 million of annuity sales from banks.
Banks want to sell annuities that their customers immediately associate with them to gain more respect as financial services companies, said Kenneth Kehrer, a consultant.
But there's a downside. "The bank doesn't want an annuity with a bad performance to have a reflection on the bank," he said.
