WASHINGTON - The Office of Thrift Supervision on Monday granted a limited thrift charter to the nation's sixth-largest insurance company, Northwestern Mutual Life Co., of Milwaukee.
Northwestern Mutual Life, with more than 2.8 million policyholders and $86 billion of assets, received permission to offer trust products and services through a federal savings bank to be called Northwestern Mutual Trust Co.
"The estate market is a rapidly growing segment of our business," James D. Ericson, chairman and chief executive officer of the insurance company, said in a press release. "Our policyowners have been asking us to provide trust services, and Northwestern Mutual Trust will increase our financial representatives' ability to bring clients the full range of financial products and services they have been calling for."
Until now, the company's 7,500 agents have directed customers in need of trust services to local banks or trust companies, at the rate of 10,000 accounts per year. But when the new thrift opens for business, which the company expects in January, all of that business will be handled by Northwestern Mutual Trust. The company also expects that some customers will transfer trust accounts to the new thrift.
Though the company expects the thrift to get most of its customers through agent referrals, it plans to open local sales offices in 15 states over the next three years. The first sales offices are slated for Wisconsin, Illinois, and Minnesota, with offices in other states to be rolled out gradually.
Projections have the thrift turning a profit by the end of its third year of operations.
The company named P. Edwin Glass Jr., to be president and chief executive officer of the trust company. Mr. Glass is a former senior vice president at First Union National Bank, where he was the managing director of personal trust and had national responsibility for the personal trust group. He joined Northwestern Mutual Life on March 1 this year.
Mr. Glass said that the timing is right for his company to get into the trust business.
"American baby boomers and their parents will pass on more than $10 trillion to their children, and many of these heirs will require trust services," he said.