Phoenix Life Insurance Co. says it is about a month away from beginning an initiative to boost its market share in the already crowded field of bank insurance and annuity distribution.
Though the Hartford, Conn., insurer could not give all of the details of the plan, a few elements are in place. It has already begun selling Phoenix Interest Plus, its first fixed annuity designed for banks, through two of its financial institution partners.
Phoenix said it intends to target banks of all sizes, from multistate to community, but it is looking specifically at those that have relationships with high-net-worth clients, which has been a linchpin of the companys strategy since 1997.
Were not about small policies with low minimums, and were not about dealing with the middle market, said Mark Tully, vice president and national sales manager for Phoenix Annuity Distribution, the unit that will lead the drive. We do a lot of estate planning. So this is going to drive us toward certain institutions.
In the past Phoenixs work with banks was spotty, Mr. Tully said, and having products like Phoenix Interest Plus wont necessarily make it the next big player in the bank marketplace.
We havent done much through banks with any of our products, to be honest, he said. But lets face it: The last thing a bank needs is another company coming in and trying to peddle a variable annuity. If thats what you do, itll be tough sledding. You have to offer more you have to have a complete solution available if a bank needs it.
Phoenix already sells its four variable annuities and one single-premium variable life product through banks, but the new fixed annuity is its first insurance product designed specifically to be sold at banks. For now the insurer does not plan to develop any others, Mr. Tully said.
Jeffrey Schulman, an analyst in Hartford for Keefe, Bruyette & Woods Inc., said it has become commonplace for insurers to make a strategic push into alternative distribution channels such as banks.
Some insurers went earlier to alternative distribution, while others stayed true to their captive agency force, Mr. Schulman said. But now most of those companies are at least exploring some form of alternative distribution.
Phoenix, which went public last month, has sales agreements for the new fixed annuity with Webster Bank of Waterbury, Conn., and SouthTrust Corp. in Birmingham, Ala. Both also sell variable annuities from Phoenix, and SouthTrust offers its single-premium variable life product as well.
The more you have to offer a bank, the better your chance to make a distribution agreement with them, Mr. Tully said. But at the same time, we want to be able to sit down with a bank and define its objectives clearly. Does the bank want our full line of products?
Gregory Vacca, first vice president of CalFed Investments, a unit of Golden State Bancorp of San Francisco, said Phoenix is wise to target a specific population segment.
So many companies I talk to say their target is the mass market, Mr. Vacca said. But when you ask them what that market is, they just reply, You know the mass market. That doesnt make sense. One banks mass market is different from another banks mass market. At least these guys know who they are after.
Michael White, president of Michael White Associates, a Radnor, Pa., consulting firm, said Phoenix isnt alone in chasing wealthy clients. Everyones looking at them, but plenty of banks have high-net-worth clients.
Annuity providers typically underserve community banks, he said. A lot of carriers go for volume. Is there is an opportunity there because they have been underserved? Insurers have generally not implemented delivery capabilities to smaller institutions scattered throughout the country.
Is it too late for Phoenix to get in the game? No way, Mr. Vacca said. There is always room for a well-rated company, with good product and good services.
