Magazine article American Banker

American General Deal Puts It in Bank Channel

Magazine article American Banker

American General Deal Puts It in Bank Channel

Article excerpt

American General Corp.'s decision to buy an insurance company specializing in bank sales of fixed annuities could help the company crack the bank distribution channel.

Last month's deal calls for American General, a financial services company that is a big seller of variable annuities, to acquire the 55% of Western National Corp. that it does not already own.

The $1.2 billion merger of the two Houston companies would create the nation's third-largest seller of annuities. And it would open the door for American General to sell variable annuities and possibly other insurance products through banks.

Western National is the biggest seller of fixed annuities through banks. It has relationships with 200 institutions, including First Union Corp., Charlotte, N.C.; First of America, Kalamazoo, Mich.; and Fleet Financial Group, Boston.

"It's our role in this to grow American General's presence in the financial institution distribution channel," said John Graf, vice chairman of Western National. "It's a growth segment that up until now they've not really taken advantage of."

American General, a big seller of qualified products like 401(k) plans, needs a distribution channel to reach retail customers. Banks will fill that role nicely, said Nicholas R. Rasmussen, senior vice president of corporate development at American General, which is the seventh-biggest annuity seller.

"We're trying to do something in the fastest-growing area in the insurance business," said Mr. Rasmussen, referring to the burgeoning market for variable annuities. Banks "are becoming a more important rather than less important distributor of annuities in the nonqualified market. Our expectation is, for the next several years at least, that's where you're going to see the highest growth."

American General, which sells mainly through agents, sold $3. …

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