In 1999, Putnam Investments' bank sales of mutual funds were nearly twice those of the nearest competing fund company, and executives at the Boston company say they believe this has given it a leg up in getting its funds into bank-sold variable annuities.

Putnam sold $7.5 billion of its funds through banks last year, and Aim Management Group sold $4.4 billion. In the first half of 2000 - the latest data available - Putnam sold $5.3 billion of mutual funds through banks; second-place Aim, $3.6 billion, according to Kenneth Kehrer Associates, a Princeton, N.J., bank insurance consulting firm.

Jane Mancini, managing director and head of insurance at Putnam, said this success has carried over to her company's variable annuity business. Putnam does not release its own numbers, but Kehrer Associates says that in the first half the Boston company sold $968 million of its funds through bank-sold variable annuities developed by outside annuity providers - more than any other fund complex.

Ken Kehrer, the consulting firm's president, said this number shows clearly that insurers recognize Putnam's performance in mutual fund distribution through the channel. "It's clearly a strategy insurance companies have followed," he said. "They see which are the best-selling funds. They'll turn to Putnam, Aim, Fidelity or Oppenheimer, or other successful fund companies."

Putnam, known primarily as a mutual fund complex, doesn't underwrite annuities. But it's an active player in the multimanaged, variable annuity market, especially on the bank side. Currently, 38% of its sales of funds in variable annuities come through banks, Ms. Mancini said. And 10 of the 32 largest variable annuities sold through banks now have Putnam funds in them.

"Banks have limited shelf space," Ms. Mancini said. "They have room for one to four variable annuities, and they want to take advantage of their reps' knowledge of our investment products."

John Pugliese, executive vice president of retail banking for the Bank of New York, said it sells eight variable annuities, some of which have Putnam funds in them, through its branch network.

"In variable annuities, the underlying investment is as important as anything," Mr. Pugliese said.

Putnam is also selective in choosing products through which it will sell its funds, Ms. Mancini added. "We want to make sure that our product lineup penetrates all channels, including broker-dealers and financial advisers."

Many of the largest variable annuity sellers use Putnam to manage the portfolios used in their products. For example, Allstate Financial had $581 million of variable annuity sales in the bank channel in the first half. Mr. Kehrer said that much of this can be attributed to the Putnam Allstate Advisor, an annuity managed by Putnam and launched by Allstate in May 1999.

Banks that sell Putnam Allstate Advisor include California Federal, PNC, Summit, HSBC, and Wachovia. Its first-year sales - from the launching through May 2000 - totaled $1.53 billion, 34% through banks, said John Hunter, managing director of Northbrook, Ill.-based Allstate Distributors LLC.

Hartford Life, the top seller of variable annuities through banks, also sells a Putnam-managed annuity, Putnam Hartford Capital Manager.

"They were one of the first mutual fund companies to focus on bank distribution, and the opportunity to partner with them in annuities was great for us," said Bruce Ferris, vice president of investment product sales at Hartford Life in Simsbury, Conn. Capital Manager currently has $35 billion of assets, and about 40% of its sales go through the bank channel.

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