An affiliate of Jackson National Life Insurance Co. has agreed to buy IFC Holdings Inc., a unit of Amsouth Bancorp that provides brokerage services to over 450 small-bank clients.
IFC, the leading seller of investment products through banks, will become a subsidiary of National Planning Holdings of Santa Monica, Calif. Jackson National, a Lansing, Mich., subsidiary of London's Prudential PLC, is one of the top 10 sellers of annuity products through banks.
Amsouth, of Birmingham, Ala., bought IFC's former parent, First American Corp., in October and has been shopping the unit around in recent months.
Financial terms of the deal, which is expected to close in the third quarter, were not disclosed. The deal will be funded from Jackson National's resources.
Sloan D. Gibson, Amsouth's vice chairman and chief financial officer, said that it decided to sell the third-party marketer in order to focus on core businesses. Amsouth has a broker-dealer subsidiary that sells investment products through its branches, including the former First American branches.
As a product manufacturer, Jackson National is better able to take advantage of IFC's distribution capacity, Mr. Gibson said. "Those advantages would not inure to any bank," he added.
"Distribution is primary in our business, and this will give us substantially more distribution than to date," said Robert P. Saltzman, Jackson's president and chief executive officer. Coupled with IFC, Jackson National would have a shot at "the No. 1 position in investment and insurance products in the bank community," he said.
Last year IFC had $168 million of gross revenue and sold just under $3 billion in investment products. National Planning, through its broker-dealer subsidiaries - National Planning Corp. of Santa Monica and SII Investments Inc. of Appleton, Wis. - sold about $3 billion in investment products last year and, excluding IFC, expects to have revenues of $200 million this year.
IFC, which will remain headquartered in Tampa, has 1,500 sales representatives and operates two units, Invest Financial Corp. and its sister company Investment Centers of America. National Planning Corp. and SII have over 900 and over 600 representatives, respectively.
In addition to giving Jackson National a larger presence in the bank arena, the deal would make National Planning bigger and, consequently, would give it more clout in negotiating with clearing firms and other product providers, such as mutual fund companies.
Robert R. Blagojevich, IFC's chairman and chief executive officer, said that IFC would remain autonomous, and that the change in ownership would be transparent to IFC's bank clients in the near term. "On the long-term basis, they will benefit from increased operating efficiencies and infrastructure resources," he said.
In particular, IFC is expected to benefit from National Planning's use of the Internet for almost all aspects of account management, including commissions, account servicing, research, and trading.
Mr. Saltzman said that Jackson would decide in the next month or so whether IFC's current management would remain in place.
Prudential PLC, the United Kingdom's largest life insurance group, last month listed its shares on the New York Stock Exchange. The insurer has expressed interest in buying a U.S. asset management firm, but observers said that the IFC deal was largely unrelated to that strategy.
The point of the IFC acquisition is to "build distribution through banks and build distribution of Jackson annuity products," said Roman Cizdyn, an equities analyst at Merrill Lynch Global Securities in London.
Kenneth Kehrer, a principal of Kenneth Kehrer Associates of Princeton, N.J. who helps match third-party marketing firms with buyers, noted that several insurance companies have purchased broker-dealers in order to boost variable annuity sales. Based on revenues and sales, his estimate for the IFC sale was $30 million to $40 million.
