Bisys Group has bought a State Street Bank and Trust Co. division that helps insurers retain beneficiaries' assets instead of just writing checks to them.
Terms of the sale were not disclosed.
Through the Retained Asset Account Services business, insurers can deposit an after-tax payout in an account bearing the beneficiary's name, with the balance available to the beneficiary at any time. The accounts typically pay 2 basis points more than going money market rates.
Providing a checking account in lieu of a check "basically allows an insurance company to retain those funds," said Bill W. Neville, president of Bisys. The Little Falls, N.J., company sells outsourcing services to financial companies.
About 100 life insurers use State Street's product, Mr. Neville said. Bisys plans to pitch it to 132 of its insurance company clients that do not offer such a product, he added.
Bisys found the business particularly appealing because its clients include de novo financial institutions, eight of which are unitary thrifts owned by insurance companies hungry for new deposits, Mr. Neville said.
For Boston-based State Street Bank and Trust Co., the sale fits with its shift in focus to institutional customers, said Alyson Riley, a bank spokeswoman. Just last month, the Boston-based company announced it would sell its commercial and consumer banking operations to Citizens Financial Group of Providence, R.I., for $350 million.
In Tuesday's deal, Bisys will retain all 44 employees from the State Street operation and eventually move them to new offices in the Boston area, Mr. Neville said.
Bisys said the retained asset account, though still uncommon, has let life insurers hold on to $9 billion of assets in more than 200,000 accounts.
The insurers' experiences differ, but some report that as much as 70% of an awarded death benefit stays in the account for a year or more, Mr. Neville said.
The service gives beneficiaries time to consider and insurers a chance to offer other options, such as annuities, he said.
