Bruce Ferris, head of bank distribution at Hartford Life, says he will have to make some tough decisions as he works to distribute as much of the insurers other products through banks as its variable annuities.
Hartford Life has long been a top distributor of variable annuities through banks last quarter it sold $841 million and retained the top spot in Kenneth Kehrer Associates quarterly rankings.
But some of its other product lines have a long way to go. For example, less than 5% of the annuities Hartford Life sold through banks that quarter were fixed.
Mr. Ferris, vice president of investment product sales at the Simsbury, Conn., unit of Hartford Financial Services Group Inc., is looking to beef up its sales of life insurance and fixed annuities through banks.
This business continues to get more competitive. We have to demonstrate that we are the best partner in the business on all these lines, not just variable annuities, he said.
On the fixed annuity side, Mr. Ferris says he has a lot of work to do. In the first quarter 61% of all the annuities sold through banks were fixed. Hartford, however, only sold $46 million of fixed annuities and placed 18th in the Kehrer rankings.
Selling more of these annuities through banks will not be easy, he said. Fixed annuity sales are a pure rate sale the highest rate wins. How do you get the best rate? is the question were dealing with right now.
Mr. Ferris said he is considering either lowering profit margins or taking more risk with the investment portfolio, but he said both those options have drawbacks.
We dont want to put our customers at risk by taking undue risks with the portfolio selections, and taking lower margins isnt a long-term solution, he said. We have shareholders to answer to.
However, We realize we have to be more competitive in fixed annuities, so we have to make tough decisions, which have not been made yet, he said.
Selling more life insurance is also on Hartford Lifes list of priorities. In March it reorganized its wholesaling unit to build up its life insurance sales by putting life, annuity, and mutual fund wholesalers in Mr. Ferris unit. All the wholesalers now know one another, so if a bank wants to add life insurance to its shelf, the annuity wholesaler can help set the wheels in motion, he said.
When it comes to life insurance sales through banks, The key to keeping the process streamlined for brokers is having a tele-underwriter handle much of it, he said. Brokers dont want to be too involved with medical aspects of life insurance. Weve succeeded in selling that product through wire house brokers, so were confident we can do the same with bank brokers.
Mr. Ferris also plans to get more annuity and mutual fund wholesalers dedicated to the bank channel. Currently the company has 35 such wholesalers, but that number will top 50 by yearend, he said.
Ive said 1,000 times that wholesaling is the key, Mr. Ferris said. We also have an obligation to continue to improve the [variable annuity] product, including focusing on the payout side of the business, to get even more sales out of those products.
While banks provide Hartford Life with more than one-third of its annuity sales 38% of its annuities were sold through banks last year Mr. Ferris says he expects much of Hartfords annuity sales growth this year to come from financial planners. Last year 19% of its annuities were sold through financial planners.
There is great upside, but the challenge is reaching them in a cost-effective way, Mr. Ferris said.
A lot of financial planner shops are two-man or 20-man outfits, so you cant deploy your wholesalers the same way as with banks, he said. We have thousands of agreements with financial planners, and a wholesaler cant call on all of them.
But the wholesalers can deploy technology, which is the key to growing that channel, Mr. Ferris said. Hartford Life plans to unveil updated technology next quarter that will give financial planners access to the insurers marketing, service, and education resources, he said.