Though Equitable Distributors Inc. laid off 10% of its work force last month, its bank wholesaling unit stayed largely intact, according to Alex MacGillivray, president of the New York-based wholesaling organization that distributes the companys insurance products to banks and broker-dealers.
The unit cut its wholesaling staff to 100, from 110, and cut one bank-dedicated wholesaler from the force of 11, Mr. MacGillivray said.
We were given a challenge and chore, Mr. MacGillivray said, alluding to the mandate of its parent company, the Paris-based Axa Group, to cut its work force by 10% worldwide. Were talking about families, so were not going to call this a win situation.
The bank distribution of annuities remains a growing business, Mr. MacGillivray said, however. So despite the firing of one wholesaler, the unit, which is a direct subsidiary of New York-based Axa Financial Inc., plans to add a wholesaler in the Midwest. It also expects to add bank wholesalers as the channel expands. Equitable began marketing a fixed annuity through banks in October.
Until then, it offered only variable annuities and in the third quarter took a sales hit when annuity sales through banks fell 32% compared with the year earlier. Fixed annuities have outsold variable annuities in the bank channel all year, due mainly to the struggling stock market. In the third quarter, fixed annuities accounted for 75% of annuity sales, according to Kenneth Kehrer Associates, the Princeton, N.J., consulting firm that tracks bank annuity sales.
By offering fixed annuities, we strengthen our relationships because we dont have to be dependent on one product, Mr. MacGillivray said. Fixed annuities are selling well throughout the industry.
He declined to name the banks that have started to carry the fixed annuity. Among the larger banks that sell Equitables variable annuities are Chase Manhattan, Fleet, SouthTrust, and Hibernia.
Wed be interested in getting many or all of them to sell the fixed annuity, he said.
It only takes distribution agreements with one or two large banks for an annuity provider to gain ground, according to Kenneth Kehrer, the president of Kenneth Kehrer Associates. Since Equitable already has relationships with many large banks, he added, it should have an easier time than a company relatively small in the business that wants to grow.
For instance, Mr. Kehrer said, Ohio National Life Insurance Co. of Cincinnati, which had $190 million of third-quarter annuity sales through banks, has only one major distribution agreement, through U.S. Bancorp.
Also, Safecos sales have grown, and much of that is because of their agreement with Washington Mutual, Mr. Kehrer said. They were the top annuity provider through Wamu in the last quarter.
