VantisLife Insurance Co. plans to develop new business by selling its cadre of life insurance products through banks in the Midwest and California.
As of Nov. 30, the Windsor, Conn., company sold its insurance products through 70 banks, up 17% from a year earlier, according to Craig Simms, its senior vice president of marketing, but he said the company is barely scratching the surface of a national opportunity. He said he expects to add 50 new banking relationships in the next two years.
“Most of our existing bank and credit union relationships are east of the Mississippi River,” he said. “We had a good year in 2009 in terms of growth, but really we just focused on the East. We see a real growth opportunity in the Midwest and California.”
In those regions, Simms said that there are 270 to 280 banking companies and credit unions in VantisLife’s sweet spot with between $1 billion and $20 billion of assets. By expanding its focus, VantisLife expects to increase its relationships 30% to 40% annually over the next two to three years, he said. “These community and mid-tier banks are really underserved,” Simms said. “The mega-banks get a lot of attention from some life insurers, but everyone else gets kind of lost in the shuffle.”
As part of its initiative to add banking relationships, VantisLife announced earlier this month it hired Darcy Kleman as its Midwest business development director and Michael Gaab at its West Coast business development director. Kleman, who is at a new VantisLife office in Schaumburg, Ill., was a vice president of relationship management at Allstate Financial Distributors. Gaab, who is based in a new office in Sacramento, was a regional sales manager for Allstate. “For the time being, these folks are going to manage and begin wholesaling for us in these regions,” Simms said. “When we see business begin to develop, we will add wholesalers to support them.”
A litany of providers, including Prudential Financial Inc. [PRU] and MassMutual, increased their overall life insurance sales last year by selling through banks. Analysts said that the bank channel is “fertile ground” for such providers.
But while some firms have a “more-is-better” sales strategy, others have avoided selling through banks altogether, potentially giving up revenue in favor of retaining top talent For example, New York Life Insurance Co. does not sell its life insurance products through banks.
Ken Kehrer, the founder of Kehrer-Limra, said any company not selling through banks is missing out on a big opportunity.
“Banks are better positioned than agents these days to capture middle market customer life insurance sales,” he said. “Life insurance agents are focusing more and more at the larger insurance companies on selling life insurance to wealthier people and business owners, leaving people like you and me out of the picture.”
Simms said that while a lot of companies are focused on selling life insurance through banks, few are focused on small and mid-tier banks. He said VantisLife wants to increase its total number of banking relationship 10%, primarily through growth in the Midwest and California.
VantisLife plans to target banks that have never sold life insurance, banks that have been unsuccessful selling life insurance and banks that have never sold it.
“It is going to take some time to get traction because, though there are some banks that we are going to be able step right in and begin selling, there are some that have never sold life products before,” Simms said. “Our goal in year one in the Midwest and the West is to bring on 20 new banks and then we would like to increase that to 30 new banks in 2011.”
Analysts said that VantisLife will have to compete with Great West Lifeco Inc. and Symetra Financial, two more established life insurance companies, for business in the Midwest and California.
“There are really only a few companies for banks with under $20 billion that are looking to offer recurring premium life insurance,” Simms said. “We think we can compete.”
VantisLife is introducing a new branding initiative complete with a new logo and a “fairly aggressive” national advertising campaign with plans to increase that ad budget 35% this year, Simms said. Through February, the company will run ads in trade publications and also begin a direct mailing campaign to targeted banks.