Chase/Bank One Deal Combines 2 Bank Insurance Powerhouses

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The planned merger of J.P. Morgan Chase & Co., New York, and Bank One Corporation, Chicago, announced Jan. 14, would create a formidable presence not only in the banking industry, but also in the life insurance and annuity businesses, analysts say.

Chase is already a major player in annuities and even underwrites them, notes Kenneth Kehrer, a bank insurance consultant in Princeton, N.J.

“Bank One is much bigger [than Chase] in annuities, because its a much larger retail bank,” Kehrer says.

Bank One is the third largest bank seller of annuities and Chase is sixth, he adds.

“They are 2 of 12 banks that sell over $1 billion a year in annuities,” he says.

The figures for Bank One do not include sales by the U.S. operations of Zurich Financial Services Group, Zurich, which the bank bought for $500 million last May.

Chase, too, has its own insurance company, which it developed on its own, Kehrer notes. That carrier is primarily engaged in sales of annuities.

Both banks “have broad insurance businesses, so it will be interesting to see how they put them together and manage them,” he says.

Michael White, head of Michael White Associates, Radnor, Pa., says that, based on data filed in 2002, combined fee income for all kinds of insurance for the 2 companies would have totaled $342 million, putting them past BB&T, Winston-Salem, N.C., and just behind MetLife and Wells Fargo in terms of insurance underwriting.

Much of that underwriting would have been for credit insurance, White notes.

Chase alone ranked fifth in 2002 in terms of total insurance underwritten, with $220 million of premium, while Bank One was sixth, with $157 million.

In investment fee income, Chase was second in 2002 and Bank One was 14th, White reports.

The combined banks, with $1.1 trillion in assets, would have 2,300 branches in 17 states and hold leading positions in retail banking, asset management, private banking, private equity and other financial products and services, according to the merger announcement.


Reproduced from National Underwriter Edition, January 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.