Northwestern
Mutual Life Insurance Co. has received a charter from the federal
Office of Thrift Supervision that will allow the insurer to offer
investment management and trust services.
| The estate market is a rapidly growing segment of our business." |
The
Milwaukee-based insurer will form a new company, the Northwestern
Mutual Trust Co., which will offer the services through its insurance
agents nationwide. Northwestern, which received approval Aug. 11,
expects the new company to be up and running by Jan. 1, 2001. "The
estate market is a rapidly growing segment of our business," says James
Ericson, Northwestern's chairman and CEO. "Our policyowners have been
asking us to provide trust services."
Northwestern says 20 percent of the
death benefits it paid in 1999 were paid into trusts. Some wealthy
policyholders opt to place their life insurance policies
in trusts in order to avoid hefty estate taxes. P. Edwin Glass, who
will serve as president and CEO of the new trust company, says one of
the key aspects of the charter is now agents will now be able to offer
trust services rather than having to refer clients somewhere else.
Products
and services the new trust company will offer include personal trust
accounts, investment management accounts, personal custody accounts,
institutional investment accounts for endowments, foundations and
charitable organizations, and financial planning for individual
investors.
The Frank Russell Co., an investment
management firm acquired by Northwestern in January 1999, will develop
the investment products, most notably consisting of mutual funds. The
products will be branded as Frank Russell products but sold by
Northwestern agents. The Frank Russell Co. is based in Tacoma, Wash. Glass says product training will be available for
Northwestern's 7,500 agents, but he is uncertain on how many agents
will become licensed to offer the new products. He says that if you are
a Northwestern Mutual policyholder interested in trusts or investment
products and your agent is not licensed to sell those products, the
agent will refer you to a licensed Northwestern agent.
Northwestern
is the latest company to seize the opportunity created by a 1999
financial services reform bill that allows financial services companies
and insurance companies to sell each other's products, subject to
federal approval.
Other insurance
companies that have received federal charters to sell financial
services or banking products are Aetna Inc., American International
Group, Hartford Financial Services, Massachusetts Mutual Life Insurance
Co., and State Farm Mutual Automobile Insurance Co. Northwestern However,
unlike those companies, Northwestern does not plan to enter the banking
business at this time. Company spokesperson Deanna Tillish says the
insurer received a "limited purpose charter," which does not allow
Northwestern to sell banking products such as savings or checking
accounts. "We never say never," Tillish says. "But we have absolutely no plans to do anything like that in the immediate future."
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