Lincoln National Life Insurance Co. is trying new ways to market its products through banks, after dismal sales in that market last year.

The Fort Wayne, Ind.-based company is planning to market directly to banks instead of through third parties. As part of that strategy, the company has merged its own third-party marketing subsidiary, Richard Leahy Corp., Minneapolis, into its financial institutions division.

As banks get more experience and more regulatory powers to operate their own insurance agencies, they want to manage their own operations.

"We saw that trend coming, saw it was inevitable, and we wanted to adapt," said Maureen Sloan, senior vice president overseeing product development at First Penn-Pacific Life Insurance, a Lincoln subsidiary.

Lincoln used to have two methods of capturing revenues at banks.

The first was through Richard Leahy, which supplied agents to banks and helped about 15 run their programs. Lincoln acquired Richard Leahy in 1984.

The other way was through a financial institutions product division that worked out of the company's First Penn-Pacific Life Insurance subsidiary in Oakbrook Terrace, Ill. That unit marketed mostly to other third-party marketing firms, such as Marketing One Inc., which managed the annuity program at Wells Fargo & Co. until 1994.

But as the third-party marketing industry fell victim to banks bringing their investments programs in-house, Lincoln suffered on both fronts. Last year the insurer sold $520 million in fixed annuities at banks, 60% less than in 1994.

"The marketplace has forced us in this direction," said Joe Neuberger, a national sales manager at Lincoln.

Lincoln has hired five sales representatives, or "wholesalers," and put them in regional offices around the country to seek out new bank clients.

Lincoln is also planning to introduce this fall an index annuity, a popular new form of fixed annuity that tries to match investment performance with a particular index. Lincoln's product will link investments to the S&P 500.

Lincoln is also planning to more closely target community banks in Pennsylvania. Ms. Sloan declined to give details.

"Perhaps '95 was a sobering lesson," said Andrew Singer, president of Bank Insurance Research Marketing Group, Mamaroneck, N.Y.

Last year was a particularly difficult one for all fixed annuity providers as the interest rate environment hurt the products.

Mr. Singer said Lincoln needs to add variable annuities to counter losses during years like 1995. "These are perilous times" for companies that lack a broad menu, he said.

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