Allstate Insurance Co. is forming a division to sell variable annuities and other life insurance products through banks, brokerages, and financial planners.
The Northbrook, Ill., company has hired Maryann Bruce, the highly regarded head of OppenheimerFunds' bank sales division, to lead the new business.
Allstate wants to improve its market share dramatically in the fast- growing variable annuity business, Ms. Bruce said; it plans to go from 16th-biggest seller to fifth-biggest in five years.
It also plans to sell fixed annuities and variable life insurance.
An Allstate spokeswoman declined to discuss the company's strategy for sales through intermediaries, saying only that Ms. Bruce's hiring was still being completed.
Allstate's strong reputation and its clout are such that it figures to make headway in the variable annuity market, analysts said. It is the nation's second-biggest property/casualty insurer, with $18.2 billion of net premiums written in 1997, according to A.M. Best.
It insures one out of every eight autos and homes in the country and has 20 million customers and more than 15,000 agents in the United States and Canada.
Allstate has a substantial life insurance business as well, but it is getting a late start in the variable annuity race. And it faces stiff competition from rivals like Hartford Life, which led the pack in variable annuity sales last year with $9.7 billion-five times Allstate's total, according to Variable Annuities Research and Data Service, Marietta, Ga.
"Allstate Life is a good company, and they are obviously coming at it with a pretty strong brand and financial resources," said Weston M. Hicks, an analyst at Sanford C. Bernstein & Co. "But I think frankly they're a little late to the party."
Much of Allstate's variable annuity business now is in the form of private-label products sold by companies like AIM Management Group and Dean Witter.
The quest for increased sales of that product comes as growth has slowed industrywide in Allstate's main business, insuring homes and automobiles.
Allstate's property/casualty business is "facing greater challenges, like the whole industry is," said Jeffrey Hopson, an analyst at A.G. Edwards. "It's a mature market."
Meanwhile sales of variable annuities, which are mutual funds in an insurance wrapper, have surged-jumping almost twentyfold from 1985 to 1997, when they totaled $87.7 billion. They are expected to grow by 15% this year, according to Variable Annuities Research.
The new post is a big step up for Ms. Bruce, who started Oppenheimer's bank sales unit in 1990 and made it into the third-biggest mutual fund seller through banks, with $2.5 billion of sales last year and projected sales of $3.2 billion this year.
"Allstate has managed to snare someone who has had a big impact on building Oppenheimer's business," said Kenneth Kehrer, a consultant in Princeton, N.J. "They came from nowhere to become a big player in the bank channel."
Said David B. Edlin, the head of bank sales for Putnam Investments: "The combination of Maryann's smarts and strong relationships and the Allstate brand make for a powerful force."
Ms. Bruce, who is to start at Allstate Oct. 15, called the move "a career opportunity."
At the new unit, to be called Allstate Financial Distributors, Ms. Bruce will assemble and direct a team of 50 wholesalers, compared with the 15 she oversees at Oppenheimer. She will also be in charge of key accounts, new business development, and marketing.
Bridget A. Macaskill, president and chief executive officer of Oppenheimer, said the company has not chosen a successor but said the company's sales through banks should continue to thrive.
"She did a phenomenal job when she was here and has left a very strong organization in place," Ms. Macaskill said.
