Though observers are calling Prudential PLC’s deal to buy American General Corp. a great move for the two companies, they are split on what it will mean to the banks that distribute their products.

Prudential, a London company that has owned the Lansing, Mich.-based annuity and life insurance provider Jackson National Life since 1986, jumped at the chance to acquire American General for $21 billion in a deal announced Monday and slated to close in the third quarter. A buyout of Houston-based American General, with its enormous fixed and variable annuity business, seemed an ideal way for Prudential to position itself in the U.S. for the anticipated annuities market boom fueled by baby-boomer aging.

But it could be a setback for the customer banks, said Lou Harvey, president of the research firm Dalbar Inc., in Boston.

“This much power in one place, it’s tough,” Mr. Harvey said. “There aren’t that many bank players in the annuity field, especially when you compare it with the hundreds of mutual fund providers in the bank channel, so insurance firms are definitely in the driver’s seat.”

He also said that reducing the field of fixed-annuity providers, even by one, is not coming at the best of times. “Fixed annuities, as far as annuities are concerned, is the less volatile sector,” Mr. Harvey said. “That’s important when you see the Dow falling the way it’s falling.”

But Martha Butler, an insurance analyst at Fitch Inc. in Chicago, said the merger could be good for banks, as American General, the largest provider of fixed annuities through banks, will have more products in its arsenal. For instance, American General doesn’t have an equity-indexed annuity, one of the more popular nonvariable annuity options to emerge over the past few years, while Jackson National does.

Mr. Harvey also said the combined company would have an expanded product line and a built-up infrastructure.

“You are looking at two powerful marketing organizations coming together, with success in the banking channel and the broker-dealer channel,” he said. “I think the only question is their ability to grow the business after the merger. They’re so big already.”

Gregory Vacca, first vice president of CalFed Investments, a unit of Golden State Bancorp of San Francisco, said his bank offers products from both insurers — term and universal life insurance from Jackson National, and term insurance and fixed and variable annuities from American General.

He said it’s too early to see how the bank’s relationship with the insurers will change. “Actually, I’m more relieved that it wasn’t another bank that bought them, because they might have taken products off the shelf for everyone else,” Mr. Vacca said. “When Citi bought Travelers, a lot of Travelers stuff was taken off the market.”

Michael White, president of the consulting firm Michael White Associates in Radnor, Pa., said if banks complain about a dwindling number of annuity providers, they’re hypocrites.

“A bank complaining about a merger is like the pot calling the kettle black,” he said, as the merger fever in the banking industry has left far fewer banks for insurance and annuity sellers to use. Banks, he said, “should follow this merger, if only because every bank should follow what the carriers of the products they sell are doing. But this merger won’t mean much to the banks immediately. It’ll be months before the distribution of Jackson National and American General’s product lines is integrated.”

Mr. White added that some community banks are going to be concerned with the merger, because the buyer is not from the United States. “I’ve heard from several small-town banks this year that they’d rather deal with American-based firms,” he said. “But I don’t think American General’s going to lose too much business over that.”

Robert M. Devlin, chairman and chief executive officer of American General, which is to move to New York in the deal, said American General and Jackson National do complement each other — Jackson National has built a strong annuity distribution network through broker-dealers, while American General is a large seller of the same products through banks, he said. American General was the second-largest provider of annuities through banks in 2000, according to a study compiled by Kenneth Kehrer Associates, a consulting firm in Princeton, N.J.

But Mr. Kehrer himself says the American General-Jackson National partnership is still missing an important component.

“From a global perspective, the combined companies need to own a major mutual fund complex,” he said. “I thought either one of those companies, before they merged, were in the market for one.”

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