If you want evidence that annuities are a hot business at banks, just listen to Michael McCoy, senior vice president of Security First Group.

The Los Angeles company - known until last week as the Holden Group - is on track to post $150 million in annuity sales this year, up 25% from last year. And so far this year, the company has captured 14 new bank clients, boosting its roster to 96.

Most of the action is with banks whose assets total $1 billion or less - a trend Mr. McCoy traces to a Supreme Court ruling in January that annuities are a permissible business for national banks.

During the previous two years, amid concern over how bank annuity powers would ultimately shake out, the company's business was hurting. An adverse ruling in the Dust Bowl region by the U.S. Court of Appeals for the Fifth Circuit was especially devastating, said Mr. McCoy, who heads the company's bank sales effort.

"We lost 25 to 30 banks from Missouri down through Texas and over to Oklahoma," Mr. McCoy said. Most simply didn't want to chance tangling with regulators until the rules were cleared up. Now, he said, "we're in the process of building that region back up. We seem to be making more presentations to community banks today than we were one year ago at this time."

Mr. McCoy stopped by the American Banker's offices last week to talk up new developments at Security First Group.

Topping his list was the company's name change, which took effect July 1. The switch was triggered by a change in ownership. In May, the Holden Group became fully owned by Toronto-based London Insurance Group, which had previously owned a 60% stake. "One of the covenants of the buyout was that (Holden Group founder) Glen Holden was going to get his name back," Mr. McCoy quipped.

The company settled on its new name to identify itself more closely with its "manufacturing" arm, Security First Life Insurance Co. The life insurer manages about $1 billion in assets, mostly fixed and variable annuities.

Right now, 80% of the annuities sold by Security First Group are products of this subsidiary and of other London Insurance Group units.

One factor aiding proprietary sales is that Standard & Poor's Corp. recently upgraded Security First Life's claims-paying ability rating to AA, the third highest. That's a plus in the eyes of bank executives, Mr. McCoy said. "They look at it hard. In their minds, it is an indication of soundness."

Security First Group also offers products of unaffiliated firms, including United of Omaha Life Insurance Co. and American International Group. By next year, Mr. McCoy believes, these firms could account for 25% of his company's annuity sales. He considers it essential for Security First Group to offer nonproprietary products. "If we are viewed as a one- trick pony, we certainly won't be viewed as a partner. We'll be viewed as a product pusher."

Though Security First Group promotes annuities for their tax advantages - earnings accumulate tax-free until withdrawn, typically upon retirement - customers seem to have a different perspective. Mr. McCoy says they are flocking to fixed annuities because yields currently top those of insured deposits.

"If you look at people who buy fixed annuities, it's the stereotypical CD buyer," Mr. McCoy said. "Anything they're buying, they're comparing to a CD."

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