The insurer Nationwide Financial Services will break onto KeyCorp's product menu next quarter with a cobranded variable annuity.
Best of America KeyCorp Choice VA will be based on the Columbus, Ohio, underwriter's top-selling Best of America Future variable annuity.
But it will probably be priced higher and offer new investment options, including three or four KeyCorp Victory Funds.
"The insurance annuity components are good and they've got good multifund managers to choose from. We think that's good for the customer," said James P. Heide, KeyCorp's annuity product manager.
The partnership marks the first time that KeyCorp's Victory Funds will be included in an annuity product, Mr. Heide said. Once the new annuity has had time to "burn in" to KeyCorp's menu, he said, he believes the product will be among the top three sellers for the bank.
The product was originally to have a 120-basis-point annual fee, compared with the 95-basis-point fee on the Best of America Future variable annuity. But the pricing is under review as KeyCorp looks at the success McDonald and Co., a Cleveland brokerage it bought in late October, has had with Nationwide's lower-fee products, Mr. Heide said.
Nationwide is one of the top three sellers of annuities through banks. Including KeyCorp, it markets through 220 banks-up from 196 in May, when Karen Eisenbach became the head of bank distribution. The company's variable annuity sales through banks were $1.75 billion last year, up 34% from 1997. Its total sales of life insurance and annuities were $2.1 billion last year.
Nationwide wants to sell through 300 banks by yearend, Ms. Eisenbach said. And it wants to increase bank sales by at least 22.6% by 2000, she said.
The hefty target is just "a sign of the times," she said.
That's because banks are looking to increase sales anywhere from 20% to 60% in 1999, Ms. Eisenbach added. Her goal is for Nationwide to be among the companies that help banks achieve those goals, she said.
And Nationwide is taking additional steps to build its services.
Ms. Eisenbach has hired three people to focus on winning new bank customers and three others to push variable life insurance, a type of whole life insurance that gives investors more participation in underlying investment gains.
"I think the timing is right for variable life," Ms. Eisenbach said. "People have been talking about it a lot."
The product's margins can help banks hit their own sales goals while also serving a need of banks' underinsured customers, she said.
Another focus this year will be Nationwide's new offshore variable annuity product for banks, she said. Last year Citigroup, the only bank offering the product, had $5 million in sales, she said.
Ten more banks will be selling the product by the end of the quarter and another 15 by midsummer, she said.
Though fixed annuities are out of favor, Nationwide wants to have a broader footing in that marketplace.
In addition to the privately labeled products it sells through a few banks, it will introduce a fixed annuity for the broader bank marketplace this year, she said. Part of the reasoning behind the new product: to meet what Nationwide perceives as a resurgence in platform sales at banks, she said.
"We think it's a long-term growth opportunity," Ms. Eisenbach said. "We think it diversifies our total business."