Nationwide Life Insurance Co. has found a promising niche: helping banks develop proprietary annuities and insurance products.
Nationwide, based in Columbus, Ohio, won a contract last week to develop a private-label fixed annuity for Banc One Corp. And this week it will roll out a variable annuity for First Union Corp.
"The growth in the bank channel is enormous, and we see it as a very significant and growing portion of our business," said Clay Thompson, a regional vice president for Nationwide Financial Institution Distributors Agency.
More than a dozen banks have launched such offerings in the past three years, hoping to reap more profit from a self-designed annuity than they would from a third party's product.
Valerie Jordan, an insurance industry consultant based in Belchertown, Mass., said banks are creating annuities to grab management fees that would otherwise go to outside firms. "It's often an issue of control," she said.
Nationwide is hoping banks' interest in proprietary annuities doesn't die down. The company sells its wares through 78 banking companies - many of them potential partners - including Citicorp and Wachovia Corp. Mr. Thompson said he hopes to add 100 more banking relationships by yearend.
Still, banks represent only a small slice of Nationwide's business. Sales through banks are expected to hit about $100 million this year, about 15% of the company's volume.
Banc One expects to trot out its fixed annuity in May. The product would be a single-premium deferred annuity that offers a 1% bonus rate the first year and additional bonuses for initial deposits of $50,000 or $100,000.
Glen J. Milesko, chief executive of Banc One Insurance Group, said the banking company is considering offering a single premium life insurance product with Nationwide as well.