Rivals For Wachovia Take Different Insurance Approaches
Two rival financial institutions competing to take over Winston-Salem, N.C.-based Wachovia Bank take strikingly different approaches to insurance sales.
As the rivalry heats up between SunTrust Banks Inc., in Atlanta, and First Union Corp., in Charlotte, N.C., it remains unclear how each would integrate Wachovias existing insurance business into its own operations.
It would appear, however, that SunTrust Banks Inc. would have by far the bigger adjustment to make if it won the battle for Wachovia. It has a relatively small insurance operation, built from scratch, offering a modest selection of products to its customers.
If it acquires Wachovia, however, SunTrust would suddenly find itself a big player in bank insurance in the southern United States.
First Union, on the other hand, takes a similar approach to Wachovia in building insurance operations, by acquiring existing agencies in its major markets.
Wachovia and First Union decline to cite dollar figures for their insurance sales, but their aggressive agency acquisition strategies over the past two years suggests that merging their operations would create a major entity.
“They are two of the largest bank-insurance operations in the country,” says Kenneth Kehrer, head of Kenneth Kehrer Associates, Princeton, N.J.
Life insurance products sold by SunTrust Insurance Services include credit insurance, term insurance and accidental death policies, underwritten by Aegon N.V. It also sells juvenile and senior life insurance products through direct mail and telemarketing of products from GE Capital and the Assurant Group.
For investment-type products, the bank has a referral agreement with Sagemark, the financial planning division of Lincoln National Life Insurance Company, Philadelphia.
“We partner our wealth-management bankers with fee-based financial planners at Sagemark,” explains Michael A. Kinsey, chairman, president and CEO of SunTrust Insurance Services, a traditional insurance agency that the bank established in-house four years ago. “When we complete an estate plan for our customer, we offer to arrange a joint meeting with our wealth-management people and Sagemark experts to sell other financial products.”
Kinsey says the bank sees a “tremendous opportunity” in life insurance and that it already had plans to go after the small-business market for life products before it decided to pursue Wachovia.
Wachovia has purchased insurance brokers in North Carolina, Florida and Georgia in the past few years.