Buoyed by its pending acquisition by Metropolitan Life Insurance Co., Security First Group, a third-party marketer and supplier of annuities to banks, is bumping up its sales plan by 60% for 1998.
With Met Life's support, Security First, a Los Angeles-based firm that works with 86 banks, accelerated its plan for sales production of variable annuities and other products. Next year it plans to produce $800 million of assets, up from $500 million, a senior executive said this week.
One-third of the $3 billion of assets in Security First accounts is in variable annuity products. The firm, which had $190 million in variable annuities in 1994, is riding the wave of popularity of the products in banks.
"At those production goals, we will have fulfilled Met Life's objective to be a top-five player," said Brian Finneran, senior vice president in charge of Security First's bank division.
Mr. Finneran said that having New York-based Met Life as a parent would provide "a menu of resources you can tap into," including property and casualty insurance, which is increasingly being sold through community banks. Met Life's $377 million deal for Security First is expected to close Dec. 1.
The move for Security First is indicative of the interest large underwriters are taking in alternative distribution channels, such as banks.
"Met and some other major players are taking a longer-term view," said David G. Kaytes, managing vice president of First Manhattan Consulting Group.
He added they are looking for "aggressive production" by "establishing a beachhead in this business, pushing on volume growth, and recognizing that there may be some cost to near term profitability."
Though some large banking companies are internalizing their insurance sales efforts, community banks still rely on third-party marketers for sales support.
Seventy of First Security's bank clients, including First Virginia Banks Inc., Harris Savings Bank, and First Western Bancorp in Pennsylvania, use its investment services group.
The timing of the Met Life acquisition would be good for Security First, which already wanted to expand product offerings to community banks to include property and casualty insurance.
"Rather than look for a strategic partner, which we would do, we have a parent that can supply us with product," Mr. Finneran said.
"This puts a whole new face in the community bank marketplace to banks that would have to buy a property and casualty agency or affiliate with a local one," he added.
Besides variable annuities, Security First already sells business planning insurance policies through community banks.
The company also plans to give a boost to another program, First Security Direct. It customizes fixed and variable annuities under private- label arrangements with 16 bigger banks, including Crestar Financial Corp. and Mercantile Bancorp., using bank proprietary mutual funds as the underlying investment.