Lincoln National Life Insurance Co. was the top seller of annuities through banks in the first nine months of 1994, a survey has found.
The Lincoln, Neb.-based insurer sold fixed and variable annuities representing $1.2 billion of premium income.
American Enterprise Life Insurance Co. was the second-biggest seller of annuities through banks, according to the survey by insurance rating firm A.M. Best, Oldwick, N.J.
American Enterprise, a subsidiary of American Express Co., sold about $889 million of fixed annuities alone during the first nine months of last year.
The survey suggested that insurers' interest in selling annuities through banks is growing rapidly.
Banks are capitalizing on a recent boom in annuities to build their investment products businesses. Annuity sales are being spurred by an aging population seeking investments that provide income for retirement.
A.M. Best's survey of the bank channel was part of an overall study the firm has done to determine how last year's rise in interest rates, combined with a downturn in the mutual fund business, affected insurance company annuity sales.
Roger Blease, manager of product analysis at A.M. Best, said annuities sold through banks have more attractive features than annuities sold through other channels.
Bank annuities offer customers higher rates and lower penalty charges for early surrender of policies, he said. Insurance companies can offer the better deals through banks because it's cheaper for them to sell annuities through that channel. That's because bank representatives demand less commission than independent insurance agents.
"Independent agents get a commission of 8% or 9%," said Mr. Blease. "Banks get less commission because the sales rep is usually on salary and an employee of the bank," he said.
Lincoln National saw declines in variable annuity sales but boosted its fixed annuity sales significantly. The company wrote $192.3 million of premiums in the first quarter, 55% more than that in the second quarter, and more than double the first-quarter total in the third quarter, $465.3 million.
The survey found that American Express had made major inroads in the bank market through its two Minneapolis-based subsidiaries, American Enterprise Life and IDS Life Insurance Co.