Lincoln National Corp. of Philadelphia has realigned its distribution to emphasize banks and aims to double its sales of investment and insurance products through them this year.

“We refocused on the bank channel in 2000, and the first thing we did was bring together the annuities, life insurance, and mutual fund groups under one umbrella for bank distribution,” said Wes Thompson, president and chief executive officer of Lincoln Financial Distributors.

Previously, “each product was driven by individual manufacturers,” Mr. Thompson said. “Our fixed annuity sales were separate from our variable life sales, and our variable life sales were separate from our variable annuity sales. Now, it’ll be easier to deal with us.”

Consolidating the product groups was a good move, said Kenneth Kehrer, president of Kenneth Kehrer Associates, a consulting firm in Princeton, N.J.

“This is a key to John Hancock’s success in the bank market — integrating their offerings through a specialist,” he said. “It also allows a bank to leverage a relationship with the insurer. If a bank sells all the lines from one company, it can ask for special service — whether it’s better pricing, better customer service, or better brochures. If everything ran separately, the fixed annuity specialist at the carrier wouldn’t have any idea about a bank’s relationship with them on another product.”

Lincoln did not break out bank sales of each product in 2000 but plans to do so this year, Mr. Thompson said.

However, studies by Mr. Kehrer’s firm to be released soon show that Lincoln sold $129 million in fixed annuities through banks in 2000, giving it a preliminary ranking of 19th among insurers in financial institution distribution. It also had $18 million in life insurance sales through banks, the studies show, and that “is a good number,” Mr. Kehrer said.

Total sales of Lincoln’s variable annuities through banks are not available, because the insurer sells the product partly through Los Angeles-based Capital Research & Management Co.’s American Funds. American Funds manages a wrap product that includes its own funds along with Lincoln’s variable annuity. Capital Research does not release distribution sales numbers.

Mr. Thompson said Lincoln’s annuity sales totaled $5.1 billion in 2000, against $4.8 billion in 1999. Of those sales, 12% to 15% came through the bank channel. That number should increase this year as well, he said.

“We’re going to target larger banks to distribute our annuities and offer them proprietary fund agreements,” Mr. Thompson said. His company has no such agreements at the moment but plans to announce its first in May. “We’re already in the product development stage.”

Lincoln sold its annuities through Wachovia, AmSouth, and Wells Fargo in 2000, and is trying to get more banks.

“If we can add banks of that size, we’d be happy,” Mr. Thompson said.

It has developed two variable life products — Lincoln VULcv and Lincoln VULdb — and thinks both will be a hit with banks, Mr. Thompson said. “One is targeted toward the accumulation of assets, the other toward wealth transfer.”

Lincoln’s life insurance sales were $218 million in the fourth quarter and $649 million for the year in 2000, versus $556 million in 1999. Its ranking is not clear, since Mr. Kehrer’s firm has not completed its tallying of the industry’s life insurance sales overall.


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