Prudential Annuities’ hiring of an experienced bank channel executive is part of a plan to increase the company’s annuity distribution in the channel, says David Odenath, the president of the domestic annuity unit of Prudential Financial Inc. in Newark, N.J.
And the insurance giant has good results in its first-quarter annuity sales through banks to build on. Kenneth Kehrer Associates, a Princeton, N.J., consulting firm that tracks such sales, said Prudential’s sales of fixed annuities had bounced to $60 million in the first quarter, from zero in the fourth. Its variable sales rose 8.4% in the quarter, to $155 million, and the overall gain was 51.4%, to $215 million.
“Clearly we see an opportunity in the bank channel,” Mr. Odenath said. “We think we want to grow the annuity business in general,” he added, and growing in bank sales is part of that. The plan includes “pretty dramatically” increasing its staff of wholesalers for the bank channel, he said.
Prudential said on Monday that it had appointed Michael T. Dibbert to the new post of senior vice president and director of bank distribution. He joined Prudential from Axa Financial, where he was managing director of Axa Distributors and the president of its financial institutions division.
Mr. Dibbert reports to Matthew Schiffman, the executive vice president of sales and distribution for Prudential Annuities.
The bank channel produced about 12% of Prudential’s $1.815 billion of annuity sales through all channels in the first quarter, Mr. Odenath said, and the company hopes to expand that share.
Prudential already has a Top 10 position in bank sales of variable annuities; it was ranked ninth for 2003, according to the Kehrer firm, with $556 million of sales, up 149% from the previous year. Overall, including fixed annuity sales, it placed 21st among 28 companies tracked by the Kehrer firm, with $557 million of sales, up 137%.
Mr. Odenath said the company would like to build on its success in variables and to improve its sales of fixed annuities both by adding new bank partners and increasing distribution with its existing partners.
Kenneth Kehrer, the president of Kehrer Associates, said the first-quarter jump in fixed annuity sales could be credited largely to Prudential’s growing relationship with Wachovia Corp., the Charlotte banking giant.
“We’re expanding our wholesaling team as well as having some dedicated relationship managers for that channel,” Mr. Odenath said. He declined to give numbers for the increase in wholesalers but, noting that “we have a small presence in wholesaling in the bank channel,” he added: “Now we hope to increase that pretty dramatically.”
Prudential sells other products in the bank channel, he said, and the annuities unit coordinates with other business groups on its approach to the channel.
“I think that the Prudential name will play well in this channel,” Mr. Odenath said, adding that it already has stimulated a strong response from bank customers.
“I think the addition of Michael is a big plus for us, given his background and experience,” Mr. Odenath said. “With his help and a lot of investigation, we are headed on the right track.”
Mr. Kehrer said Mr. Dibbert is a well-known bank sales executive who “was very successful in building Axa’s distribution.”
“Building variable annuity distribution is very competitive,” he said. “They’ve got an uphill climb, but they’ve hired a very experienced and successful person to lead that charge.”
Carmen Effron, the president of the CF Effron Co. LLC consulting firm in Westport, Conn., said that hiring an experienced person like Mr. Dibbert and adding wholesalers is a “ really good step in the right direction” but that Prudential must go even further to expand its bank channel sales.
“It’s a terrific start to hire someone with experience,” she said. But a successful bank program also requires “good commission accounting, a good process for taking applications, a good process for training on an ongoing basis, and good customer service.”
These back-office processes make or break a bank-annuity sales program, Ms. Effron said, and separate the top players in the channel from the rest of the pack.
Insurers that want to sell through banks also must be flexible and willing to work within banks’ existing systems, which may include a preferred annuity application process, for example. And it goes almost without saying that the products must be competitively priced and have popular features, she said.
Building all of this takes time, Ms. Effron said. However, Prudential has a strong brand name that should help it grow, she said.
