Slow and steady have been the watchwords for Pacific Mutual Life Insurance Co.'s entry into the world of banks, where the company sells variable annuities.

The Newport Beach, Calif.-based insurer recently rolled out a new variable annuity, which will be offered at banks and elsewhere. And it's developing a fixed annuity product to be sold through banks within several months.

"We're relatively new to the bank channel, and that's why relatively speaking our sales from that channel are low," said spokeswoman June Arce. Building that business "is more of a long-term goal," she said.

Pacific Mutual sold $1.2 billion of variable annuities in 1996, but just 6% of that total was through its 26 bank outlets. It has begun to strengthen its efforts to sell through banks, however, with three dedicated wholesalers, said Ms. Arce. The company has no specific sales target, though, she said.

The vast majority of Pacific Mutual's sales is done through financial institutions, financial planners, and regional and national wirehouses.

David Shapiro, who heads a Los Gatos, Calif.-based consulting company, said it's not surprising that Pacific Mutual is taking a go-slow approach to selling annuities through banks. That sales channel is dominated by a few big players, led by ITT Hartford Life Insurance Co.

"I think it's more difficult today to catch a foothold," said Mr. Shapiro. "A lot of companies are moving more slowly so they don't end up expending significant resources, both personnel and financial, if they don't know how that market is going to work for them."

Banks are not willing to cede the field to the leaders, on the other hand, because annuities are such an attractive business niche, he said.

For one thing, variables shift more of the risk onto the customer than do fixed annuities.

For another, it's possible to create a greater variety of variable annuities than fixed, and that can be a marketing advantage.

Even with less than 1 percent of the market for variable annuities sold through banks, Pacific Mutual is a top-20 seller in that category-an indication of how fragmented the market is.

The insurer has been selling in banks for three years; its established offerings are two variable annuities, one for the middle market and one for high-end customers, said Ms. Arce.

Pacific Mutual's new product, a variable annuity with flexible premiums, comes in two forms-a qualified plan, which is set up by employers, and a nonqualified, taken out by individuals.

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