NU Online News Service, Jan. 15, 2004, 6:02 p.m. EST — If J.P. Morgan Chase & Company, New York, and Bank One Corp., Chicago, succeed with their merger plans, the deal will create a formidable presence not only in the banking industry but also in the life insurance and annuity businesses, analysts say.[@@]
Together, the banks would have $1.1 trillion in assets and 2,300 branches in 17 states, according to the merger announcement.
Chase and Morgan are “2 of 12 banks that sell over $1 billion a year in annuities,” says Kenneth Kehrer, a Princeton, N.J., bank insurance consultant. “Chase is already a major player in annuities and even underwrites them, but Bank One is much bigger [than Chase] in annuities, because it’s a much larger retail bank.”
Bank One has been the third largest bank seller of annuities and Chase is sixth, according to Kehrer figures.
Kehrer’s 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 in May 2003.
Chase has developed its own insurance company. The insurance subsidiary is engaged primarily in sales of annuities.
Both Chase and Bank One “have broad insurance businesses, so it will be interesting to see how they put them together and manage them,” Kehrer 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 ahead of BB&T, Winston-Salem, N.C., and just behind MetLife Inc., New York, and Wells Fargo & Company, San Francisco, in terms of insurance underwriting.
Much of that underwriting would have been for credit insurance, White reports.
Chase alone ranked fifth in 2002 in terms of total insurance underwritten, with $220 million of premium revenue, while Bank One was sixth, with $157 million.
In terms of investment fee income, Chase ranked second in 2002 and Bank One ranked 14th, White says.