Thanks to ties with a growing number of banks, Western National Corp. has been posting brisk sales of fixed annuities this year.
The Houston-based company sold $195 million of fixed annuities through banks in the first quarter, up 30% from the previous quarter and double the amount in the year-earlier period.
"It's going to be a banner year," said Western National president Michael J. Poulos. "We're right on target with our goals" for 1996.
Western National specializes in developing branded fixed annuities for financial institutions. These products account for more than two-thirds of the company's sales.
Last year, Western National helped launch seven bank proprietary annuities. It announced two more this year, for First Michigan Bank Corp. and H.F. Ahmanson & Co.'s Home Savings of America.
John A. Graf, national sales manager for Western National, said the company's distribution network has swelled to 5,900 bank branches nationwide, 3,500 more branches than at the beginning of last year.
This year the company plans to sell $1.5 billion of annuities, he said, including slightly more than $1 billion through banks and thrifts.
Mr. Graf would not disclose sales volume for the institutions, but he said First Union Corp., by virtue of size, was its top-selling bank client last year. The annuity sales programs at Michigan's First of America Bank Corp. and TCF Financial Corp., Minneapolis, were singled out for having higher than average penetration of the customer base.
Despite the gains, Western National's 1995 annuities sales fell $20 million short of projections, at $780 million.
Mr. Graf blamed the flat yield curve, which has made interest rates on long-term investments such as annuities less competitive with similarly yielding shorter-term investment products.
The long process of getting regulatory approval to launch these bank proprietary annuities also put a dent in sales, Mr. Graf said.
"We didn't have as many banks get up to speed as we had hoped in '95," he said. It can often take up to six months to get the go-ahead for a bank to launch and sell its own annuity product.
The company has also delayed the introduction of a variable annuity which it had hoped to unveil nationwide last September. For now the product, marketed under the Elite Plus name, is sold only in a handful of states, including California and Texas.
The company has plans to offer the variable annuity broadly beginning this summer, and to begin cobranding and private-labeling it for banks later this year.