Lincoln Financial Group was the fastest-growing big player in bank variable annuity sales last year, and as an encore the Philadelphia company is adding wholesalers in order to continue gathering share.
Kenneth Kehrer Associates, a Princeton, N.J., consulting firm that tracks bank-channel sales, said that Lincoln’s variable annuity volume grew 220% last year, to $384 million.
The insurer increased its sales force by 4% last year, to 364, and began to see a strong increase in sales as a result, according to Randy Gabrielson, a senior vice president and account executive in Lincoln’s financial institutions division.
“We have increased our wholesalers markedly,” he said. “We are now approaching 400 wholesalers and have a commitment as an organization to continue to grow.”
Lincoln had $125 billion of assets under management at Dec. 31. Through its wealth accumulation, retirement income, and wealth protection businesses, the company sells annuities, life insurance, 401(k) and 403(b) plans, savings plans, mutual funds, managed accounts, institutional investment, and comprehensive financial planning and advisory services. Its 2005 sales totaled $19 billion, Mr. Gabrielson said, and 18% came through the bank channel.
Lincoln increased overall sales by 83% in the bank channel last year, he said, but all channels attracted new distribution. Lincoln’s bank annuity sales, including the fixed product, which fell sharply along with much of the industry, declined by 9%, to $461 million, according to the Kehrer firm.
“The seasoning of our wholesalers has really started to pay dividends,” Mr. Gabrielson said. “They have been in the network for a year or two, and they are becoming much more productive in their roles. Now that they have been developing these relationships, they have had the time to build.”
Kenneth Kehrer, the president of the consulting firm that bears his name, said that Lincoln and John Hancock — whose bank variable annuity sales grew 129% last year, to $1 billion — set the pace in the channel. “This is substantial in a time when variable annuity sales have been more modest nationally through the bank channel,” he said. The product’s sales through banks were flat overall, he said.
Hancock has also expanded its wholesaler force in the channel but on a much smaller base than Lincoln. Fred Nicholas, the president of Hancock’s bank annuities channel, said in an interview last month that his bank wholesaler force grew from 15 to 25 last year and that he expects to add more. Hancock’s overall annuity sales through banks grew 112%, to nearly $1.7 billion, as it bucked the weakness in fixed annuities with a 91% gain last year, according to the Kehrer data.
Mr. Gabrielson said Lincoln, and the entire insurance industry, is in the early stage of a growth curve, specifically in the bank channel.
The company will pursue organic growth, he said, and, possibly, strategic acquisitions. In October, Lincoln announced a deal to buy Jefferson-Pilot Corp. of Greensboro, N.C. (Jefferson-Pilot’s shareholders voted Monday to approve the $7.5 billion sale.) The deal is expected to close early next month.
The closing would give Lincoln the most universal life sales in the industry, the Philadelphia company said when the deal was announced. Jefferson-Pilot has been one of the major providers of index annuity products, a fast-growing variant of the fixed product, Mr. Kehrer said when the deal was announced, but it does not sell variable annuities.
Lincoln was the 20th-ranked seller of annuities in the bank channel in 2005, the Kehrer firm said, and 15th-ranked in variables.
“Lincoln has a nice mix of strengths in terms of developing organic growth,” Mr. Gabrielson said. “If an acquisition makes sense, we’d be interested in looking into it, but we don’t need to acquire to continue our growth and success.”
The company is developing “hybrid” products that customers can use as they move from accumulation to distribution stages in their lives, he said, so that they have a steady stream of income.
