Invest Financial Corp., a top marketer of mutual funds and annuities through banks, may hit the acquisition trail if its parent company is bought by a Swiss insurer.
Invest could "go out and acquire other competitors" once Zurich Insurance Group completes its deal for Kemper Corp., said Merlin Gackle, chief executive of Tampa, Fla.-based Invest.
"For the long term, the acquisition has tremendous opportunities for penetrating the marketplace," he added.
Kemper, which has controlled Invest since 1989, agreed last week to be acquired for $2 billion by Zurich Insurance Group and other investors. The deal is expected to close in May, ending a yearlong effort by Kemper to find a new owner.
Investment product marketing firms like Invest are coming off a rough year in which mutual fund sales at banks plummeted.
Invest, which operates sales programs at 240 banks and savings institutions in 45 states, has stayed near the front of the pack. But it may need to acquire other third-party marketers to continue growing at the same pace, because large banks are increasingly bringing the marketing of investment products in-house.
The company added 62 banks in 1994, but Mr. Gackle said he expects to add just 40 this year.
Stronger corporate ownership would certainly provide the shot in the arm needed for expansion. With roughly $10 billion in capital, Zurich should be able to supply Invest with the resources to bolster technology and perhaps even hire new employees, observers said.
Still, Invest has not acquired competitors in the past, and some observers said the company is unlikely to go on a buying spree.
"Based upon Zurich's limited knowledge of the U.S. market place, I wouldn't anticipate they would come out of the chute and say 'here's money - go buy somebody,' " said Geoff Bobroff, a consultant to mutual fund companies.
"Clearly, Zurich has a new haven for selling products," Mr. Bobroff said. Executives there "are going to want to leverage whatever distribution channels Kemper has at its disposal."
Officials with Zurich Insurance Group did not return repeated phone calls. Zurich benefits from the deal because Kemper's U.S. life insurance business is 30 times bigger than Zurich's, according to A.M. Best Co., an insurance rating firm.
Zurich will have full ownership of Kemper's money management arm, which includes Invest, and control 51% of its life insurance business.
The balance of Kemper's insurance business will go to Insurance Partners, a group formed in February 1994 to sponsor global acquisitions in the property and casualty and life insurance industries. Chase Manhattan Corp. is one of the partners.
Invest is 96% owned by Kemper's financial services subsidiary and contributes 16% of that unit's total revenues.
Invest isn't the only Kemper unit expected to benefit from new ownership. Kemper's mutual funds and insurance products should sell better through banks now that "Invest will have a stable parent," Mr. Bobroff said. Kemper's assets under management were about $62.7 billion at yearend, a 9.5% drop from a year earlier.
The expected sale of Kemper also appears to secure Mr. Gackle's position as head of Invest. Previous deals would have put the company in the hands of other firms that own investment marketing companies, and might have led to a consolidation.
General Electric Co., which owns Seattle-based GNA Corp, had offered $2.2 billion for Kemper in March 1994. And Conseco Inc., which owns investment marketer Bankmark, Morris Plains, N.J., bid for Kemper last June but was unable to come up with the financing.