Met Life to Sell Insurance at GlenFed
Upping the ante in the trend by banks and thrifts to sell insurance products, Glendale Federal Bank on Thursday announced a partnership with Metropolitan Life Insurance Co. to sell policies in “mini-offices” carved out of its California branches.
Starting in the fourth quarter, Met Life, the nation’s second-largest life insurer, will set up shop in the lobbies of 38 GlenFed branches in Los Angeles and San Diego counties, offering its full range of individual life insurance products, Met Life Vice President John Chatfield III said.
Over the next 12 to 15 months, the idea will take hold throughout the state.
Financial terms of the partnership were not disclosed, but Chatfield said Met Life will pay a lease to GlenFed for the space. New York-based Met Life’s own sales representatives will handle the insurance business.
“The marriage . . . adds significantly to our ability to provide financial services to our over 1 million customers in the state of California,” GlenFed Chairman and Chief Executive Stephen J. Trafton said. The deal is “the first to involve partners of the size and market penetration of Met Life and Glendale Federal” in California, he added.
Separately, Trafton said GlenFed and the U.S. government will meet in court Aug. 1 for the first time since the U.S. Supreme Court’s ruling earlier this month favoring GlenFed in its $1.5-billion breach-of-contract lawsuit. At that hearing, Trafton expects a trial date to be set.
In anticipation of a windfall for GlenFed from the suit, analyst David Dusenbery at CS First Boston on Thursday raised his recommendation on GlenFed to “buy” from “hold.”
“I believe very little value from the lawsuit was priced into the shares,” he said, setting a 12-month target of $21. On Thursday, GlenFed’s stock closed up 75 cents at $17.50 a share in New York Stock Exchange trading.
The Met Life deal is in keeping with an industry trend. As regulatory restrictions have eased in recent years, banks and thrifts have moved steadily toward the sale of insurance and other financial products as a way to broaden their markets.
But analysts said GlenFed and Met Life’s arrangement takes the trend a bit further. “It’s taking the next step, which is actually having Met Life employees sell products,” said Campbell Chaney, a thrift analyst with Rodman & Renshaw in San Francisco.
The agreement also marks another step in GlenFed’s aggressive campaign to take market share from other state financial institutions. In addition to a smart-alecky ad campaign aimed at Bank of America and Wells Fargo, the thrift has also experimented with setting up ATMs in McDonald’s restaurants.
“Rather than try to build the life insurance sales ourselves, it makes sense to work with a well-known, highly regarded and prominent provider of life products,” Trafton said.
Under the agreement, Met Life will sell its full portfolio of individual life insurance products, including term, whole life and universal variable life insurance. GlenFed and Met Life will coordinate their marketing of the products.
Met Life’s Chatfield said the company is also exploring similar arrangements with other banks.
GlenFed has 150 banking offices and 22 loan offices in California.
