JPMorgan Chase & Co., New York, has agreed to sell Chase Insurance Group, its life insurance and annuity underwriting business, to Protective Life Corporation, Birmingham, Ala., for about $1.2 billion.
Protective Life says it expects to close the sale in third quarter 2006.
Chase is selling most of its insurance and annuity underwriting operations after deciding it could make more money offering straight banking services, said Charles W. Scharf, chief executive of Chase's Retail Financial Services, which includes Chase Insurance.
"We will continue to meet our customers' insurance and annuity needs without underwriting the products," Scharf said in a statement.
A similar rationale was offered by Citigroup Inc. last year when it sold its Travelers life insurance operations to MetLife Inc., New York.
"Hardly any banks underwrite insurance," notes Kenneth Kehrer, a consultant in Princeton, N.J.
Chase has had an extensive annuities business since 2002 but, except for credit insurance, had not underwritten life insurance until 2004, when it bought Bank One, Chicago. Bank One had purchased its life insurance business from Zurich Life a year earlier. Those products were sold primarily through direct-response marketing, notes Kehrer.
Chase says it will keep its debt-protection insurance business and continue to sell life and annuity products through its branch network.
Chase's credit insurance operations tallied $132 million in sales in the six months ending June 30, 2005, reports Michael D. White, a consultant in Radnor, Pa.
"One wonders the degree to which Chase was committed to the insurance business, since it only bought Bank One in September 2003," adds White.
He notes that Chase recently unloaded other Bank One heritage businesses that didn't meet its return-on-equity criteria, including the online securities firm, BrownCo, sold to E-Trade late last year.
