Insurance Companies in the U.S. and U.K. Enter the Banking Business

Kanako Amano

John Downing， head of electronic distribution at Lloyds TSB， says: "We are looking verycarefully at Egg. The internet has really started to come to the fore."

"Egg" is a new brand of financial services provider that has attracted attention in the U.K.since its debut in October 1998.

With the fall of regulatory barriers separating banking and insurance， most people assume thata one-sided surge will occur as banks enter the insurance business. But in the United Statesand United Kingdom， not all insurance companies are necessarily on the defensive; a growingnumber of them have recently established bank subsidiaries.

This paper focuses on developments among insurance companies setting up bank subsidiaries.The main problem insurance companies face when they enter banking is deciding how theirinsurance agents should treat deposits. We look at two contrasting approaches by the largestlife insurer in the U.K.， Prudential， and the largest property and casualty insurer in the U.S.，State Farm， to gauge the overall progress of this new trend.