From the elegant gold tower atop its Manhattan headquarters to its promise to be the "company you keep," New York Life Insurance Co. has long stood for doing things the traditional way.

But three months ago the 153-year-old company stepped into the new world of life insurers, announcing an ambitious program to make acquisitions of annuity and asset management businesses and to expand into high-growth regions.

"We have to think into the future, into the next century," said Stephen Ray, a New York Life senior vice president.

Across the country, life insurance companies are seeking to freshen up their images and transform their strategies in a high-stakes effort to keep pace with commercial banks, mutual fund firms, and brokerages.

Like banks, the insurers are faced with a consumer marketplace that hungers for financial products other than the ones the companies built their business around-in this case, policies that provide protection against untimely death.

Businesses once built almost solely around the sale of life policies and fixed annuities have branched out into the sale of faster-growing equity- oriented products such as variable annuities, variable life insurance, and stock-oriented mutual funds.

Companies such as Hartford Financial Services, Nationwide Financial Services, Allmerica Financial, and John Hancock Mutual Life Insurance Co. are now billing themselves as full-fledged financial services firms or, at the very least, retirement specialists.

Some of the companies have even weaned themselves from their reliance on a single distribution channel-the life insurance agent. Instead, they are pushing their wares through retail stock brokers, financial planners, and commercial banks.

"The name of the game now is the accumulation of retirement savings, and the old-line companies that have traditional distribution systems will have to change themselves over time if they want to compete," said Joseph J. Gasper, the president of Nationwide Financial Services Inc., a life and annuity underwriter based in Columbus, Ohio.

Clearly, the industry still has a long way to go.

A recent study by Andersen Consulting suggests that stock-based life insurance companies lag the rest of financial services industry in business growth. These companies were twice as likely to be "stalled businesses," meaning they generated lower than average revenue growth and returns.

"The data show a lack of growth from within, due to a lack of product innovation," said Brian A. Johnson, an Andersen Consulting partner who analyzed the results.

Though the study does not include insurers owned by their policy holders-mutuals-Mr. Johnson believes that those firms on average lag the rest of financial services even further because they tend to be "larger, slower-moving organizations."

Much hangs in the balance for life insurers. As in banking, insurance executives know well that failure to perform can spell loss of independence. And the industry's accelerating consolidation is sure to extend beyond traditional boundaries. Many insurers see the planned merger of Travelers Group and Citicorp as a sign of things to come.

"I think there will be a lot of life insurance companies that won't make it," Mr. Gasper added. "We are the third inning in consolidation of the industry."The life insurance industry's fight for continued relevance reflects the shifting tastes of consumers. Simply put, Americans are not very excited about life insurance. Though there will always a place for the product, sales have been sluggish for the past 20 years, with a compound annual growth rate of less than 5%.

Over the same period, Americans have placed a growing share of their available dollars into investment products that will increase their income while they are living. This trend has been fueled by the decade-long bull market in stocks and steady increases in human longevity.

"People are more concerned about living too long than living to short," said Andrew Giffin, a consultant with Tillinghast-Towers Perrin.

From 1970 to 1996 the life insurance industry's role as an intermediary of America's personal assets fell sharply, from a 19.9% market share to 13.8%, according to data compiled by Tillinghast-Towers Perrin. By contrast, the share held by mutual fund companies soared from 7.5% to almost 44%

Indeed, the life industry's salvation over the past decade has been the emergence of fixed and variable annuities, tax-deferred investment products that helped insurance companies regain some of their lost share over the past decade.

"Life insurance is not a sexy product," said Morton Spitzer, chief operating officer at Liberty Life Assurance Co., Boston. "People at the sales level would rather sell annuities and mutual funds."

From 1986 to 1994 annuities sales helped the insurance industry's share of personal assets jump from 9.9% to 15.6%. But more recently the share has fallen off almost 2 percentage points, indicating the industry continues to face challenges, according to Mr. Giffin.

Life insurance executives are clearly concerned about their standing in the financial services marketplace.

According to a survey of 300 of the largest North American life insurers conducted by insurance consultant Tillinghast-Towers Perrin last year, "Many CEOs expect banks, diversified financial service companies, and mutual fund companies to be winners in a newly configured competitive environment due to advantages they have in cost structure, customer reach, and attractive product offerings."

Moreover, a majority of the executives surveyed didn't feel well- equipped to deal with the competitive challenges facing their industry.

That should probably not be surprising, given the industry's overall reputation for lacking management skills such as brand-building and technology-based marketing. Over the past two years the industry has tried to compensate for this by recruiting leaders from banking, brokerage, and other fields.

But the industry does have its share of success stories, and executives with these institutions feel they can do battle with financial services companies of all stripes.

Some insurance companies have succeeded by increasing the range of both their products and their distribution channels. Travelers Group is already viewed as a full-fledged financial services firm, the result of its acquisitions of Salomon Brothers and Smith Barney.

And there are a host of other insurers that are positioning themselves in faster growing businesses tied to the accumulation of personal assets.

John Hancock, for example, has sharply increased its revenue growth rate by pushing into mutual funds, annuities, and speciality life insurance products-such as second-to-die and corporation-owned "key-man" policies- that carry higher premiums than most consumer-oriented policies, said Thomas E. Moloney, the company's chief financial officer.

Mr. Moloney said that Hancock is now marketing its products through banks, broker-dealers, and even over the Internet.

While many insurers continue to rely on their network of life agents, lest they offend them, Mr. Moloney said that his firm has made the added effort "to make them understand why we are going through these routes."

Some companies have established a model for success by focusing on niche businesses.

SunAmerica, a Wall Street darling because of the outsize returns it has generated in recent years, has focused on the underwriting of variable annuities. The Los Angeles-based company got out of life insurance in the 1980s and has few regrets.

According to Jay Wintrob, a SunAmerica vice chairman, the company has succeeded by thinking outside the insurance box. For example, SunAmerica has spent heavily on building a brand image as a "the retirement specialist" through creative national television advertising.

"There is a lot of product clutter out there," he said, explaining the importance of brand-building.

Mr. Wintrob also talks of another SunAmerica competitive advantage-an entrepreneurial culture built around a compensation structure tied to performance. About three-quarters of the compensation of senior-level management comes from bonuses and equity-related incentives, he says. Most of the insurance industry lack such incentives, partly because of laws that prohibit the firms to incorporate as stock-issuing public companies.

Says Mr. Wintrob: "We don't gather our self worth by viewing ourselves as excellent representatives of the life insurance industry. We are a financial services company."

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