News Currents

April 23, 2007

Banks’ total insurance revenue dipped

The nation’s bank holding companies (BHCs) experienced a slight decline of 1.3 percent in their total insurance revenue from $44.1 billion in 2005 to $43.5 billion in 2006. Citigroup Inc. (N.Y.), Wells Fargo & Co. (Calif.), Countrywide Financial (Calif.), HSBC North America Holdings (Ill.), and BB&T Corp. (N.C.) led all bank holding companies with significant banking activities in total insurance fee income in 2006, according to findings released by Michael White Associates (MWA) and the American Bankers Insurance Association (ABIA).

The findings are based on data reported to the Federal Reserve Board by top-tier BHCs. The analysis measures the banking industry’s insurance business and provides some benchmarks that gauge bank insurance performance.

“While the industry’s insurance underwriting activities registered a decline of 5.2 percent, its insurance brokerage fee income continued growing, increasing 10.6 percent in 2006. Among the top 50 in insurance revenue, the mean ratio of insurance revenue to non-interest income was 14.8 percent in 2006,” said Michael D. White, president of MWA. “So, insurance activities continue to make increasingly meaningful contributions to banking revenues.”

During 2006, 656 bank holding companies (or 67 percent of all top-level BHCs reporting) earned some type of insurance-related revenue. BHCs’ insurance brokerage fee income increased 10.6 percent from $10.98 billion in 2005 to a record $12.14 billion in 2006.

“While insurance underwriting income has grown at a compound annual rate of 3.1 percent since 2001, insurance brokerage fee income has been racing upward at a compound yearly average of nearly 20 percent during that same period,” said Valerie Barton, ABIA executive director. “Its growth was slowed in 2006 by softening of property/casualty premiums and declines in some agencies’ contingent commissions. Insurance brokerage remains healthy, and the prospects for continued growth in bank insurance revenues are very positive.”

The analysis includes a ranking of the top 50 bank holding companies on the basis of the absolute dollar amount of total insurance revenue (earnings from sales and underwriting) and on the basis of total insurance revenue as a percentage of the institution’s total non-interest income.

Topics Agencies Profit Loss

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Insurance Journal Magazine April 23, 2007
April 23, 2007
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