Union Bank of California is diving headfirst into the insurance products business.

On Jan. 23 the San Francisco-based bank plans to start selling automobile insurance in conjunction with Wilmington, Del.-based provider American International Group.

Shortly thereafter, it will begin offering two insurance products in conjunction with Coverdell & Co.

The relationship with Coverdell, an Atlanta-based insurance marketer, will let Union offer accidental death insurance from Baltimore-based insurer Monumental General and a medical discount prescription purchasing service from Chicago-based Best Benefits, said John Davis, a bank vice president.

Coverdell has already initiated some marketing of accidental death policies but will accelerate its efforts this month, said Michael D. Levison, chief executive officer of the Atlanta company.

All the insurance products will initially be offered only in California, said Mr. Davis. Sales will be expanded to Oregon and Washington, where Union has five offices, once the bank gets state approval there, he said.

Bank customers will be able to get a discount on auto insurance premiums "anywhere from 10% to 20%," said Mr. Davis, describing the benefits of the relationship with AIG.

But $30 billion-asset Union, a subsidiary of Bank of Tokyo-Mitsubishi Ltd., is not stopping there. Later this year it plans to add renters and homeowners insurance, also underwritten by AIG.

It is also negotiating with several insurers to sell term life insurance. Elsewhere, Union may eventually look to provide medical insurance for serious conditions such as cancer, Mr. Davis said.

The bank has segmented its insurance marketing into mass-market and affluent sectors, said Mr. Davis.

It plans to pitch policies to the mass market through direct mail and via telephone, he said.

However, Union is taking a different tack with the affluent set. It has set up a three-person unit, called Union Bank of California Insurance Services, to field queries. The three agents will deal one-on-one with Union's affluent individual and business customer base, said Mr. Davis.

"From a strategic point of view it rounds out our offerings," said Mr. Davis of the insurance initiative.

In California Union is up against banking companies like Wells Fargo & Co., BankAmerica Corp., and Glendale Federal Bank, all of which offer insurance products, he said.

Union's move is indicative of the need for banks to offer a fully rounded product array to stay competitive, said Valerie Jordan, an insurance consultant based in Belchertown, Mass.

"For them to remain competitive with the other California banks, it's a necessary evil," she said.

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