Lincoln National Life Insurance Co. says it is negotiating with some larger regional banks to sell their mutual funds if they will sell Lincoln's annuities.

The Fort Wayne, Ind., company, which has been trying to increase its sales through banks, would offer a selection of a given bank's funds.

"We'd want to offer the ones that are attractive and a good fit for Lincoln's advisers," said Bill Boscow, chief marketing officer for the company's annuity operation, Lincoln Financial Advisors.

The unit is also Lincoln's broker-dealer, with about 2,000 planners nationwide. Many came to Lincoln through its 1996 purchase of Cigna Financial Advisors.

"It would be advantageous to both companies if a bank wanted to distribute a mutual fund through our broker-dealer," Mr. Boscow said.

Each relationship with a bank would be customized, including the payout piece, Mr. Boscow said. The banks would not be required to participate in a reciprocal distribution relationship, Mr. Boscow said, but the company prefers that any distribution agreement established would be "an interdependency."

He would not name the banks with which Lincoln is holding discussions.

Lincoln's hiring of Mr. Boscow last month showed that it wanted to develop its presence in the bank market. He had been a senior official of Cova Financial Services Life Insurance Co. in Oakbrook Terrace, Ill. Cova also customizes annuities in joint ventures with banks.Analysts interviewed said that banks should be open to such relationships with insurers, because they can provide new avenues for selling bank mutual funds.

"There are around six thousand mutual funds out there," said Michael White, president of Michael White Associates in Radnor, Pa. "For the bank, this would be an additional source of the outside distribution of the product - the bank is branching out of the branch network, so to speak.

But for insurance companies, finding a bank to work with is not always easy, said Kenneth Kehrer, president of Kenneth Kehrer Associates. Establishing a relationship "could take a while," he said. "Sometimes it takes years for an insurer to get a bank to agree to choose it."

Lincoln, however, has a tighter deadline. "We hope to have a couple of deals in place by the end of this year" and to be selling annuities through those banks by the second quarter, Mr. Boscow said.

"It's something we know we have to do," he added. "We know how important the bank channel is."

Lincoln said it sold $143.8 million in annuities through banks during the first three quarters of this year.

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