After announcing plans last year to double its annuity sales through banks, Lincoln Financial Group did much better than that its sales of fixed annuities in the channel rose more than ninefold during 2001, according to Kenneth Kehrer Associates.
Kenneth Kehrer, president of the Princeton, N.J., consulting firm, said Lincolns sales of fixed annuities through banks totaled $1.26 billion last year, compared with $129 million in 2000.
Stephen Long, a senior VP and managing director of Philadelphia-based Lincoln who heads up the bank channel sales at its distribution arm, Lincoln Financial Distributors, said the huge growth in 2001 was largely due to a product introduced into the bank channel during the year.
This fixed annuity "allows people to lock in an interest rate floor and then have the interest rate increase 25 basis points each year for the next five years," Long said. The combination of falling interest rateswhich made the products guaranteed increases attractiveand a slumping stock market helped make it a big seller, he said.
Overall, Long said, fixed annuities had a strong year for many companies as the conservative investors who buy from banks got out of equities. "I think we ran right into the trend," he said.
In addition to adding an attractive product, Long said, Lincoln also expanded its staff, to 35 people devoted to the bank channel, including 10 wholesalers. The latter are responsible for all products sold in the bank channel, including both fixed and variable annuities, he said.
The insurer has been working to sign up banks and to get more of its products on the shelf in banks where it already has a relationship, he said.
Companies such as AmSouth Bancorp have expressed interest in selling more of Lincolns products, Long said, and a major goal this year is to build on the success of the fixed annuity by getting midsize and large banks to add products like variable annuities and life insurance.
Long said variable sales in the channel have been "disappointing" but the down stock market eroded interest in variable annuities from any vendor. "That puts us right up with everybody else," he said.
Lincoln does not break out the figures for its sales through the bank channel, Long said, and Kehrer, who tracks sales data for annuity providers, said he was unable to get numbers on the companys variable annuity sales.
The insurer recently introduced a variable annuity with Wells Fargo & Co. called Wells Fargo New Directions, which could help its sales in the bank channel.
"Our strategy for 2002 is to really go back to the banks who made an impact for us with our fixed annuity and show them the strengths of the rest of our product line," Long said, mentioning variable annuities, life insurance, and long-term-care coverage.
"I think were scratching the surface with our whole program," he said.
Kehrer said that to have increased sales to such a degree in just one year, Lincoln must "be on the shelf of some big banks, and youve got to capture market share in those banks." A handful of banking companies each has 5% or more of the bank-sold annuity market, he said, and Lincoln sells through one of them, Wells Fargo.
The combination of a strong new product and the insurers existing shelf space at a major annuity seller like Wells accelerated sales last year at Lincoln, Kehrer said.
Long said he believes that his company is well poised to sell additional products in the bank channel, including life insurance and long-term-care coverage, now that it has prepared the way with fixed annuities. He predicted a greater interest in life insurance as baby boomers who have spent the past couple of years accumulating assets look to protect them.
Investors are finally beginning to realize that the stock markets returns in the past seven years were "absolutely an aberration," Long said, and that a sound financial plan requires more than just equities.
Lincoln hopes to help bank reps formulate financial plans for their customers by developing software that would help chart an investors needs. "Were trying to bring some tools to the individual bank producer about long-term advantages of allocating your assets properly," he said.
Overall, Lincoln sold $6.4 billion of annuities through all channels last year, a 22% increase from 2000, according to the companys fourth-quarter and fiscal year results, which were released Monday. First-year life insurance sales at retail totaled $569.3 million for the year, up 1%.
The companys assets under management grew to $126 billion.