American Savings Bank of Stockton, Calif., a thrift that has aggressively sold mutual funds and annuities, is now beefing up its insurance program.

The $18 billion-asset company, soon to be bought by Seattle's Washington Mutual Inc., has hired a former insurance consultant to oversee a staff of life insurance agents. And the company hopes soon to get insurance licenses for 15 of its 80 investment representatives, who work at its ASB Financial Services unit in Irvine, Calif.

"We want to offer all kinds of insurance products through as many distribution methods as we can," said Carl A. Formato, president of MSS Insurance Agency Inc., a unit of American Savings.

Mr. Formato has hired Jeffrey Green and given him the title of vice president, sales. Mr. Green, who is to start Dec. 1, founded Southwest Affiliated Insurance Services, an Upland, Calif., consulting firm, in 1990.

He has worked with such clients as Glendale Federal Bank and California Federal Bank, Mr. Formato said. Before consulting, Mr. Green oversaw the insurance program at Great Western Financial Services from 1985 to 1990.

American Savings, which now has two agents who sell only insurance, plans to soon add 10 - in addition to the 15 brokers it hopes soon to have selling insurance as well as investment produts.

Mr. Formato wants six agents working closely with investment representatives to offer insurance for customers' estate planning needs, as well as term products.

Another six agents are to sell term insurance to customers of the bank's mortgage company, which has the second-largest market share in California behind California Federal, he said. Washington Mutual is also a big mortgage lender.

American Savings currently sells the life insurance products of Allmerica Financial, Cincinnati; First Colony Life Insurance Co., Lynchburg, Va.; and Kemper Life Insurance Co., Chicago.

Mr. Formato's moves come in the wake of a restructuring in the thrift's insurance and brokerage units. It has put both businesses under the supervision of Craig Davis, executive vice president and director of mortgage operations.

They previously reported to a retail bank executive.

Mr. Formato said he expects slow but steady growth in insurance sales' contribution to earnings. In 1995 his unit earned about $1 million. He projects increases of 80% this year 1996, to $1.8 million, and 38% next year, to $2.5 million.

Consultants said employing independent agents sounds logical but is not enough to make a program work. Banks must analyze their customers better and match products to their needs. Agents haven't seen an increase in life insurance sales for a decade, said David Kaytes, managing director, First Manhattan Consulting Group, New York.

"The concern I have is that banks are picking up a set of services the insurance industry has already been offering that don't work," said Mr. Kaytes.

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