Lincoln National Corp., fortified by a deal to buy a Cigna Corp. unit, is planning to start selling life insurance and variable annuities to bank customers.
Till now Lincoln, an insurer based in Fort Wayne, Ind., has sold only fixed annuities in the bank channel.
Lincoln expects to buy Cigna's individual life insurance unit for $1.4 billion by yearend. The unit has begun selling life policies and variable annuities through trust and private banking divisions of banks. Lincoln officials say they hope to build on that effort, combining Lincoln's product menu with Cigna's.
A new unit, Lincoln Financial Advisors, will combine the efforts of Cigna's 600 career agents with Lincoln's 1,700. Earlier this year, Cigna's career agent division-Cigna Financial Advisors-began a concerted effort to reach the customers of private bankers and trust executives.
"Cigna Financial Advisors is known as an elite, upscale organization that works with clients with $2 million in net worth or above," said J. Michael Hemp, president of Lincoln Financial Advisors.
"Lincoln Financial Advisors has a much broader market range," he said. "The acquisition will allow Lincoln to expand the services that Cigna is already performing in that bank channel."
Cigna, formerly Connecticut General, could prove a boon to Lincoln in reaching wealthy clients, observers said.
"Connecticut General was long known in the industry as one of the best training grounds for agents," said Michael White, a bank insurance consultant in Radnor, Pa. Presumably, he said, Lincoln is "picking up a good force of life insurance agents.
"How they create a strategic plan to integrate bank-based sales either through that force or through some other methods remains to be seen," Mr. White said.
Westley V. Thompson, a vice president at Cigna who was helping it break into the bank market with variable annuities, said in an earlier interview that the life brokerage division was working with six banks, which he would not name. He was on vacation last week and unavailable to comment.
Though the Cigna-Lincoln product menu would be impressive, the sales effort would also include the wares of other suppliers. Lincoln Financial Advisors "can offer a wide range of products, not just Cigna or Lincoln," Mr. Hemp said.
For example, though Cigna's flagship variable annuity product, dubbed Accrue, would be a leading product, the division would also sell policies and annuities issued by other underwriters.
Several banks, including BankBoston Corp., Banc One Corp., First Chicago Corp., First Union Corp. and Wachovia Corp., have set up agencies to sell insurance to their wealthy clients. Many underwriters, such as Allmerica Financial, Equitable, Manufacturers Life, Massachusetts Mutual, and Northwestern Mutual, are paying visits to banks to connect with private clients.
"They're hunting for elephants. Agents do that all the time in the open market," Mr. White said. "It's usually easier if you have a referral. It's a warm lead and introduction by a credible referral source, so that's useful."
