## Facts

- NationsBank of North Carolina, N.A., through a brokerage subsidiary, sought permission from the Office of the Comptroller of the Currency (OCC) for the subsidiary to act as an agent in selling annuities issued by insurance companies.
- The products included variable annuities (payments vary with investment performance), fixed annuities (fixed payments), and hybrid arrangements (allocation between fixed and variable features could be adjusted periodically).
- The Comptroller approved the plan, concluding that:
  - brokering annuities falls within “the business of banking” and the “incidental powers” of national banks under 12 U.S.C. § 24 Seventh; and
  - annuities are not “insurance” for purposes of 12 U.S.C. § 92, which expressly authorizes certain small-town banks to sell insurance.
- Variable Annuity Life Insurance Company (VALIC), a competitor, sued under the Administrative Procedure Act seeking to set aside the Comptroller’s approval.
- The district court upheld the Comptroller’s decision; the Fifth Circuit reversed, treating § 92 as barring large-city national banks from selling annuities as “insurance.”

## Issues

1. Whether the Comptroller’s determination that national banks may act as agents in the sale of annuities is a reasonable interpretation of the National Bank Act, especially 12 U.S.C. § 24 Seventh, warranting judicial deference.
2. Whether annuities sold through a bank’s brokerage subsidiary are “insurance” under 12 U.S.C. § 92, such that § 92 would bar sales by national banks located in places exceeding 5,000 inhabitants.

## Decision

- The Supreme Court unanimously reversed the Fifth Circuit.
- The Court held that the Comptroller’s interpretation authorizing national banks to broker annuities is reasonable and entitled to deference.
- The Court concluded that annuity brokerage fits within national banks’ “incidental powers” under § 24 Seventh as part of the business of banking.
- The Court accepted the Comptroller’s determination that annuities are not “insurance” within the meaning of § 92, so § 92 did not bar the activity.

## Legal Principles

- When a statute administered by an agency is silent or ambiguous on the precise question, a reviewing court upholds the agency’s interpretation if it is a permissible construction of the statute (Chevron deference).
- The Comptroller of the Currency, charged with supervising national banks, receives substantial deference in defining the scope of banking powers under the National Bank Act when the statutory text leaves room for interpretation.
- “Incidental powers” under 12 U.S.C. § 24 Seventh may include brokerage of financial products that function as investment instruments, if the agency reasonably classifies the activity as part of the business of banking.
- A specific, limited authorization in 12 U.S.C. § 92 for small-town banks to sell “insurance” does not, absent clear statutory language, implicitly restrict broader authority otherwise available under § 24 Seventh.
- Where “insurance” is undefined in § 92, the agency may reasonably interpret the term to exclude annuities that are primarily investment-oriented, and courts may defer to that interpretation.

## Conclusion

The Court upheld the Comptroller’s approval allowing a national bank’s subsidiary to broker annuities, deferring to the agency’s reasonable reading that the activity falls within banks’ incidental powers under § 24 Seventh and that annuities are not “insurance” barred by § 92.


NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251 (1995)