Bancassurance, the combination of banking and insurance, seems to be working well for Australia’s third-largest insurer, but the model has been all but abandoned by US financial giant Citigroup.

Suncorp Metway expects net profit of $395-$410 million for the first half of 2004/05, compared with $281 million for the previous corresponding period.

The Queensland-based financial services business says the forecast is based on preliminary unaudited accounts – the interim result is due for release on February 25.

Suncorp’s general insurance division forecasts a rise in profit before tax of more than 50%, while the banking division expects an increase in pre-tax profit of about 20%. Wealth management pre-tax profit is expected to rise about 13%.

New York-based Citigroup has conceded that merging bank, insurance and brokerage businesses under one banner has been unsuccessful.  It plans to sell Travelers Life & Annuity and most of its international insurance businesses to MetLife for $US11.5 billion.

Seven years ago, Travelers, an insurer that owned the Salomon Smith Barney investment bank and brokerage, merged with Citicorp to create Citigroup.

Industry consultant John Trowbridge – who formerly managed Suncorp’s general insurance division, told Sunrise Exchange News Suncorp Metway is successful because it has positions in both banking and insurance, but he doesn’t expect to see other companies adopt the bancassurance model.

“Suncorp Metway has done well in Queensland,” he said. “There are successful examples of conglomerates such as Wesfarmers, but the synergies have to be external as well as internal, and Suncorp’s are just in Queensland.

“Hypothetically if you were to merge NRMA and Westpac, it would be difficult because they have different identities and brands.”