Chase Manhattan Corp. is jumping into the business of managing variable annuities, following a trail blazed last year by Fleet Financial Corp.

The New York bank plans to unveil the annuity this fall as an extension of its Vista family of mutual funds, a spokeswoman confirmed.

The Vista variable annuity will be launched once the bank completes market research and finalizes underwriting and distribution arrangements, she added.

Annuities are tax-advantaged insurance products designed to produce a stream of retirement income.

While annuities that invest in fixed-yield instruments have long been popular, variable annuities, which typically invest in mutual funds, have caught on as a way to maximize return.

Growing Popularity

Eager to capitalize on the investments' growing popularity with consumers, several banks that manage mutual funds have begun adding variable annuities to their mix of proprietary products.

Since Fleet unveiled its variable annuity in early 1993, about a dozen banks have begun managing variable annuities, or have announced plans to do so. Others already in the business include First of America Bank Corp., Kalamazoo, Mich., and Great Western Financial Corp., Los Angeles.

Although banks can manage the mutual funds that underlie variable annuities and thereby boost their fee income from asset management, most banks are prohibited from underwriting the annuity contracts.

To get around this prohibition, banks team with insurance companies that handle the underwriting.

SunAmerica Corp., a Los Angeles-based insurance company, is said to be the front-runner in negotiations to underwrite the Vista variable annuities.

A spokeswoman for SunAmerica confirmed the discussions, but said it is too soon to say what role the company will have. Market sources said that SunAmerica at one point appeared to have the deal locked up, but said Chase has since signaled an interest in talking to other partners.

Chase has a long relationship with another insurance company, GNA Corp., whose salespeople sell mutual funds and annuities in Chase branches.

Seattle-based GNA spoke with Chase about helping to create the annuity, but did not get the contract, GNA president Patrick Welch said in a recent interview. "It was a disappointment to us," Mr. Welch said.

Another big annuity underwriter, American Skandia Life Assurance Co., Shelton, Conn., is said to be interested in the Chase contract. Company officials could not be reached for comment.

Although banks are beginning to make inroads in variable annuity sales, products managed by two nonbank companies Hartford Life Insurance Cos. and Franklin Financial Services Corp. - still dominate the bank market, according to Kenneth Kehrer, a consultant in Princeton, N.J.

-- Debra Cope contributed to this article.

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