Hartford, Conn. - Though Citigroup's recent sale of Travelers Life & Annuity to MetLife may appear to indicate that the "financial supermarket" idea of full-scale mergers is an untenable working model, banks and insurers continue to find ways to integrate their services, according to a new study by Conning Research and Consulting, Inc., Hartford, Conn.

The banking industry has determined that selling insurance is a profitable activity but that it is not necessary, or even desirable, to be the manufacturer of the product. Insurers have started or acquired banks to increase assets from customers. These approaches constitute the next phase in the integration of insurance and banking.

"Many banks have developed insurance sales programs that generate significant non-interest income for the banks, diversifying their revenue bases," said Terence Martin, analyst at Conning Research & Consulting.  "Meanwhile, insurance companies have entered the retail banking market by either purchasing or chartering new banks."

The Conning Research study, "The Next Phase of Insurance and Banking: Rethinking and Retooling for Strategic Advancement," analyzes the intersections between the current banking and insurance markets, explores the strategies they are using to enter each other's businesses, and looks forward to explore ways in which the banking and insurance industries may continue to converge.

"While the model of the fully integrated financial services firm has not developed as expected," said Stephan Christiansen, director of research at Conning Research & Consulting, "it is clear from our analysis that both banks and insurers will continue to test growth opportunities in the intersections between the two industries. Banks look to increase fee income through distribution of insurance, while insurers look to increase assets under management by offering bank services to their clients. Looking forward, there are new products, such as health savings accounts, that appeal to both banks and insurers and create new rationales to both for venturing into non-core businesses."

More information about "The Next Phase of Insurance and Banking: Rethinking and Retooling for Strategic Advancement" is available on the company's Web site at www.conningresearch.com.

Source: Conning Research and Consulting, Inc.

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