Life Insurance Co. comes with a concession: The Chicago banking company cannot launch its own life insurance program for three years.

The deal, struck 11 days ago, lets Northern sell trust products to the high-net-worth customers among Northwestern's nearly three million clients. In return, Northern will refer customers seeking life insurance products to Northwestern. The banking company does not have any kind of insurance program.

The deal comes at a time when many banks are getting into insurance to build fee income, but it nonetheless makes sense, said Mark Stevens, Northern's president of financial services. He said he hopes the deal is successful, so Northern can simply renew it in three years.

"Frankly, it gives us the option to build what is our core business -- trust and investment management," Mr. Stevens said. "This is an experiment, but I think it's got tremendous upside potential for us and potentially no downside."

The $80 billion Milwaukee-based life insurance company will refer customers with more than $2 million in assets to Northern.

Customers with fewer assets will be served by a new trust company that Northwestern plans to launch -- and Northern will help out there, too. If regulators approve Northwestern's application for a limited-purpose federal thrift charter, the $30.2 billion-asset Northern would provide administrative systems, consulting, and training support to the new trust company. Some asset management services also would be provided, Mr. Stevens said.

The arrangement is one more example of how insurance companies and banks are looking to work together, said Carmen Effron, head of C.F. Effron, an insurance consulting firm based in Westport, Conn. "This makes a lot of sense for them."

Each company brings a strong reputation and a good customer base to the table, she said.

The relationship certainly has top-level commitment: The idea for the companies to work together came up in a casual conversation between chief executives from both companies, Mr. Stevens said.

Both said the two companies have similar customer-oriented styles, he said.

The resulting model is being tested in Chicago, Milwaukee, and Minneapolis, Mr. Stevens said. Full-scale implementation is expected by the second quarter.

Despite the differences in business lines, Mr. Stevens said, no cultural problems are expected.

Northern has been making informal referrals to and receiving them from other companies, including insurers, he said.

Those established personal relationships could prove a hazard to the new referral relationship, Ms. Effron said. Many of Northwestern's 7,500 agents already refer business to other private bankers and trust officers, and the insurer's estate-related cases have grown at double-digit rates in the last few years.

Mr. Stevens would not say whether Northern is working on similar deals elsewhere. He also declined to disclose any revenue projections.

"We're breaking new ground," Mr. Stevens said. "The beauty of this is it will bring two very established companies together, and who knows where it will go?"

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