Don't tell Glen J. Milesko that the insurance business will only generate scant profits for banks.

As president of Banc One Insurance Services, Mr. Milesko is presiding over an operation that expects to generate about $100 million in insurance commission revenues from $900 million in premiums this year.

At that rate, his division is approaching 5% of pretax income at Columbus, Ohio-based Banc One Corp.

Asked about profitability goals, he says, "I don't think we even know what the potential for insurance is."

While Mr. Milesko's operation has emerged as a bona fide profit center for his bank, many other banker insurance executives openly question whether they have the capability to generate such earnings. And these doubts have kept many institutions from making a serious commitment to this business.

For bankers seeking benchmarks of profitability among their peers, a consultant offers some enlightenment.

According to Ken Kehrer, a Princeton, N.J.-based consultant, few banks have succeeded in the insurance business.

A recent survey of 13 bank insurance programs done by Mr. Kehrer found an average of just $16,200 in pretax income from sales of homeowner's insurance and $9,710 from commercial property and casualty policies for every $1 billion of book assets.

Average pretax income arising from retail life insurance sales was even lower: $3,963.

But while Mr. Kehrer has painted a picture of what is, another consultant, Paul M. Buse of Washington-based Risk Management Services, is regaling bankers with tales of what could be.

Emboldened by stories like Mr. Milesko's, Mr. Buse has created a pro forma income statement for "Opportunity Bank," a hypothetical $1 billion- asset bank with a customer base of 40,000.

This fictitious bank, according to Mr. Buse, has integrated a wide variety of insurance opportunities through its typical mix of loans, commercial relationships, and trust accounts.

Unlike many banks, "Opportunity Bank" sells a full complement of credit and noncredit insurance offerings, including whole- and term-life policies, commercial lines of property and casualty, and auto warranty coverage.

According to Mr. Buse, this community-sized bank can generate about $1.2 million of after-tax profits from selling insurance. Subtract the sale of annuities - considered by many to be an investment product - and the income figure is still a respectable $900,000 in after-tax profits, or 0.09% of the bank's asset base.

Mr. Buse predicted, moreover, that banks would add 5% to 10% to after-tax profits by aggressively pursuing insurance opportunities.

Mr. Buse's numbers are derived from projected penetration rates for the 12 lines of insurance in his study. For example, he predicted that 10% of the 40,000 individual households that comprise Opportunity Bank's customer base would buy life insurance. By his calculation, life insurance would contribute $390,000 of after-tax profits for this institution.

Combined, personal and commercial property and casualty insurance could contribute about $100,000 of after-tax income, according to Mr. Buse.

One of the most startling assumptions Mr. Buse makes is that one of every 10 households would buy individual life insurance. That 10% penetration rate is quite generous, and Mr. Buse conceded that his scenario is "something we won't see for five to 10 years."

But Mr. Buse sees life insurance as a "growth industry" for banks, though sales in the country overall have been stagnant in recent years. His assumptions are based on the popular belief among many in the bank world that banks will gain share at the expense of traditional life agents in serving the needs of low- and middle-income Americans.

"We've had a real downfall in the traditional insurance agent's ability to reach a household with income of $60,000 or less," he said.

Not all bankers share his rosy outlook.

"Consultants do things to sell consulting," said Richard Clark, head of the insurance program at Chevy Chase Bank, a thrift in Chevy Chase, Md. "It seems overly aggressive."

But other executives are striving to live up to Mr. Buse's lofty projections.

Andrea Martin, president of Comerica Insurance Service Corp., a subsidiary of Detroit's Comerica Inc., thinks a mature bank program for insurance sales can produce up to 5% of the parent's pretax income.

Ms. Martin conceded that her program isn't there yet. "We just started our property and casualty business. But in three to five years, we'll be a mature program."

As for Mr. Milesko, he isn't limiting himself to the parameters assumed for Opportunity Bank.

"I wouldn't limit myself to 10% of pretax income,"

he said.

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