Though Jefferson-Pilot Corp.'s sales of bank fixed annuities have been lackluster this year, the insurer is expecting that in the fourth quarter these sales will double their $86 million second-quarter total.

Jefferson-Pilot of Greensboro, N.C., is one of the few insurers that have not shared the industrywide surge in fixed annuity sales this year. Its fixed annuity sales through banks dropped 2% from the first quarter to the second.

But Michael Denton, the senior vice president of financial institution marketing for Jefferson Pilot Financial, is optimistic about future insurance sales through banks for three reasons. First, sales of its new Premier 5 Annuity, a market-value-adjusted annuity it began distributing through banks in April, are high; second, it signed a sales agreement with Bank of America in July; and third, its push into bank sales of life insurance for both the middle market and the estate planning needs of the high-net-worth market is now a year old.

These steps are the latest in a campaign Mr. Denton launched when he arrived three years ago, to distribute products directly to banks.

When he first came on board at Jefferson Pilot Financial, its only bank sales were through third-party marketers.

Today, Mr. Denton said, Jefferson-Pilot has fixed annuity sales agreements with 100 banks, 10 of which are among the 25 largest banks in the United States. The company still distributes some of its annuities through third-party marketers, but that has become a smaller portion of its business.

Despite having larger banks in its distribution base, Jefferson-Pilot's sales in the first half of this year were still moribund.

Mr. Denton blamed the flat sales on the fixed annuity product then available, which he said was "nothing special."

"It was good, but it wasn't different" from competitors' annuities, he said.

Mr. Denton said he knew the insurer needed to develop a more marketable fixed annuity or it would continue to lose market share in the third quarter. In July it began to distribute Premier 5, a market-value-adjusted annuity which it had developed earlier in the year. It is a type of deferred annuity that delivers a fixed rate of interest for a specified number of years, which can range between five and 10. If the contract is surrendered before the guarantee period is up, then the cash value is adjusted to reflect prevailing interest rates.

The Premier 5 product has a five-year interest rate guarantee - a feature popular with banks - and a guaranteed return of premium feature, which guarantees that if the annuity holder needs to surrender the policy, he or she can do so and receive back at minimum, the amount of premium paid in.

With this new product, Mr. Denton said, third-quarter sales of fixed annuities have been "exploding." He credits Premier 5's five-year guarantee for some of it. He declined to reveal specifics.

John Fenton, a principal at Tillinghast-Towers Perrin, an Atlanta consulting firm, said that most fixed annuities in the market generally have either a guaranteed return of premium or a five-year interest rate guarantee, but not both - an element he said is a strength of Jefferson-Pilot's product.

"Customers are getting away from 'trust me' products, where only the first year's interest rate is set," Mr. Fenton said.

Kenneth Kehrer, the president of Kenneth Kehrer Associates in Princeton, N.J., said that market-value-adjusted products have generally not sold well through banks. The reason, he said, is that these products are tied to the performance - and risks - of the bond markets. Most people are attracted to fixed annuities that hedge away from market risks, he said..

Mr. Denton does not intend in the near future to offer variable annuities through banks. "The variable annuity market is really dominated by a couple of players, and they've done a very good job," he said. "Then, as the current market for variable annuities isn't strong, it's not a great time" to try to enter that market. But bank sales of variable annuities "aren't something we'd rule out down the road," he said.

That does not mean, however, that Jefferson-Pilot does not offer any variable products to banks. For the past three years, Mr. Denton has also been building Jefferson-Pilot's sales of life insurance through banks.

Since his arrival, the company has hired five bank-dedicated wholesalers - three in the past year - who specialize both in annuities and life insurance. He also hired a life insurance specialist for advanced cases, such as estate planning cases, about a year ago.

The company offers variable universal life and universal life coverage, on individual and survivor policies, to 25 banks, several of which also distribute its fixed annuities.

Mr. Denton said insurance sales are up "over 90% over last year, and we have some solid distribution agreements with bigger banks, like First Union and Wachovia." Though he would not release specifics, he did say that the numbers are still very small.

Part of the reason, he said, was the institution of a simplified application process about a year ago, as well as the growing realization by banks that their clients need life insurance. "It's a growing channel," he said.

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