Short Takes: Fixed Annuity Starts Strongly at 1st Chicago

First Chicago NBD Corp.'s first proprietary fixed annuity made up 50% of the $8 million of fixed annuities sold by the banking company last month.

Pegasus Flex-Choice Annuity, underwritten by Western National Life Insurance Co. and managed by First Chicago NBD Investment Management Co., offers a 7% rate on a five-year annuity and 7.25% on a seven-year product. Flex-Choice, First Chicago's first proprietary annuity, was launched Dec. 1.

The rates are credited with bringing in accounts at a time when sales of fixed annuities at banks have waned in the face of the rising popularity of variable annuities. Return on the latter is tied to performance of securities markets, usually through mutual fund investments.

First Chicago has sold variable annuities underwritten by Hartford Financial Services Group since 1994 but wanted to give customers who are wary of investment risks more options, according to Carter Neild, who is in charge of proprietary product sales in First Chicago NBD's brokerage.

"Because of the typical bank investor profile, there is always a need for a fixed annuity," Mr. Neild said. "There will always be this stable base of demand for it that we want we tap into."