It's the turtle versus the hare in Louisiana.
With the legal and regulatory coast clear for banks to sell life insurance, two New Orleans-based rivals are predicting success in the business.
Hibernia National Bank and First National Bank of Commerce are about equal in size, at $10 billion and $9 billion of assets, respectively. And each plans to sell insurance throughout the state.
Hibernia, however, has a head start: It began selling life insurance a month ago. First National plans to unveil its business within 60 days.
Compared with the five years it has taken First National to plan its insurance business, Hibernia's year and a half has been a sprint.
Clifton Saik, who overseas First National's bank card group and insurance efforts, said that his rival's head start does not matter.
He pointed out that Hibernia unveiled its proprietary mutual funds in 1988, fully five years before First National, but that First National now holds the edge in assets-$2 billion to Hibernia's $850 million.
He predicts First National's slow but steady approach ultimately will win the race.
Yet Mr. Saik, who is looking for someone to head the insurance unit and has just two people working part-time on the project now, takes pains to point out that he does not foresee fighting Hibernia for bank customers. Customers will probably buy insurance from the bank they use now, he said.
"I really don't feel like I'm competing with them," he said. "We're more likely to compete with the independent agents."
Kenneth Rains, executive vice president of trust, brokerage, and insurance at Hibernia, agreed that bank customers will probably remain loyal to their banks. But he added that a good package of insurance and other products could lure other banks' clients.
"Insurance is potentially a very powerful arrow in the quiver," said Mr. Rains.
Hibernia did not create a new life insurance division; the business was folded into Tower Insurance Agency, a six-year-old unit of the bank that also sells fixed annuities.
It is headed by bank vice president Jim Meridith, a former agent and field director for Northwestern Mutual Life. It has five licensed agents-a number Mr. Rains said will grow to as many as 48 within two years-and it plans to use a direct mail blitz later this year to snare term-life customers.
Hibernia has half a dozen carriers, including Phoenix Home Life, Canada Life, and John Hancock. It offers term, whole, universal variable, and long-term-care insurace.
By the end of the year the bank should add disability and property/casualty lines, said Mr. Rains.
First National plans to sell life and health insurance-and property/casualty within five years-but the bank has not decided whether it will sell the products through third-party marketers, its own agents, or direct mail.
"We're grappling with the questions now," said Mr. Saik.
So Hibernia has a clear head start. But Mr. Rains does not think his bank's head start will bring only short-term success, as Mr. Saik's point about the mutual fund assets implies.
Mr. Rains pointed out that the banks' respective mutual funds have different goals, with First National's being short-term investing and Hibernia's "disciplined long-term approach."
"We welcome the competition and always will," he said.
