Sales of Fifth Third Bancorp's first private-label annuity are approaching $1.5 million.
Launched in December through the Cincinnati banking company's northern Kentucky branches, the Fifth Third Fixed Annuity is underwritten by Western Southern Life Insurance Co. The banking company has sold other companies' annuities for four years.
It plans to put the product on its menu in April alongside AIG, Nationwide, and Hartford Life fixed annuities at all of its 470 banking centers, said Jenni Wehrmeyer, vice president and product manager at Fifth Third Securities.
And Fifth Third, which sold $30 million of annuities last year, is planning a big marketing push next month to coincide with the annuity's wider availability, Ms. Wehrmeyer said.
"It's going to be their lead product," said J. Lavender, president of IFS, a subsidiary of Cincinnati-based Western Southern that has financial institution marketing, fund advisory, and broker-dealer units.
The fixed annuity offers returns better than those currently being paid on certificates of deposit, Ms. Wehrmeyer said. The annuity is paying 4.7% with a one-percentage-point bonus. But she said the bank is hoping to offer a higher rate by April.
Market gyrations in the third quarter fueled an increase in bank sales of fixed annuities and contributed to a dip in sales of variable annuities, according to Kenneth Kehrer Associates, Princeton, N.J.
"We're hoping to take advantage of that" sales uptick, Ms. Wehrmeyer said. Fifth Third employees, who make referrals to the bank's 60 brokers, are to be schooled in the basics of annuities as part of the program. However, she declined to discuss specific marketing methods the company will use until the product is formally rolled out next month.
The Fifth Third Fixed Annuity has a seven-year surrender period, she said. The bank chose Western Southern because it is highly rated and the bank knows the company, she said.
In 1998 Western Southern sold $343 million of annuities through banks, putting it 17th in Kehrer's 1998 rankings.