GNA Corp., a leading manager of investment product sales programs at banks, is expanding its insurance business with the acquisition of a Massachusetts-based underwriter.

GNA's purchase of Harcourt General Insurance Cos., in a deal valued at $400 million, is expected to close by yearend. It is being financed by GNA Corp.'s parent, General Electric Capital Corp.

While the deal isn't expected to have an immediate impact on GNA's bank sales effort, it clearly has executives at the Seattle-based company thinking about ways to broaden the mix of products it offers banks.

"This allows us to build product and distribution and improve profitability," GNA chairman Patrick E. Welch said in a telephone interview.

"Whether there will be a linking across to banks remains to be seen," he added. "It would be very nice if it did work out."

At the same time, the acquisition appears to signal that General Electric wants GNA to be more than a bank investment product marketer.

General Electric acquired the unit in 1993 in a bid to stake out a bigger role in the bank market.

The Harcourt deal "gives GE and, by extension GNA, an opportunity to be more competitive," said Douglas Moat, chairman of the Manhattan Group, a consulting firm in New York.

Mr. Welch emphasized that GNA is not backing away from banks, but he acknowledged that it doesn't want to be dependent on them. "I think it's good if you can broaden your distribution capabilities," he said.

Indeed, GNA, like other bank, investment product marketers, has seen sales decline after several record-setting years. Its 1993 sales through 100 client banks totaled $2.4 billion, down 33% from 1992's volume.

Harcourt has three operating units that market life, health, and other offerings through insurance agents, chiefly in farm communities in the West and Midwest.

GNA is already in the insurance business, both as the underwriter of its own line of annuities for sale through banks and as operator of GE Capital Assurance Co., an annuity underwriter that sells its wares through life insurance agents.

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Fleet Financial Group, Providence, R.I., said it has completed its previously announced acquisition of IBM Credit Investment Management Corp., a subsidiary of Stamford, Conn.-based IBM Credit Corp.

IBM Credit Investment provided investment management and administrative services for the IBM Mutual Funds.

Fleet National Bank, the Fleet subsidiary, has taken over as administrator of the IBM funds, and Fleet Investment Advisors has taken over as their investment manager.

Fleet Investment Advisors manages $25.5 billion in institutional and personal assets, including $4 billion in Fleet's mutual fund family, Galaxy Funds. IBM Mutual Funds will be incorporated into The Galaxy Fund II, a no-load fund family established in 1990.

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J.P. Morgan & Co. Inc. is teaming up with a privately owned development bank in India to provide investment management services there, the company announced last week.

The new company, ICICI Asset Management Co. Ltd., will manage, develop, and market mutual funds to individuals in India.

Morgan will take a 40% equity interest in the Bombay-based firm; Industrial Credit and Investment Corp. of India Ltd. will own the rest.

Morgan is beefing up its presence in India to take advantage of the country's developing economy, according to company officials.

"We believe it is one of the most promising economies in the world," said C. Nicholas Potter, chief of Morgan's Global Asset Management group.

India's mutual fund business was opened to the private sector as part of a 1991 economic reform program.

The market totals $10 billion, with 80% of it controlled by a single company.

Last year, $3 billion flowed into India's mutual funds and the industry is expected to grow 25% a year, said Industrial Credit chairman Narayanan Vaghul.

The joint venture is the second one between the New York-based bank and the Indian company. In 1992, they rounded an investment banking company.

-- Kalen Holliday

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