Total Bank Insurance Revenue Up in First Half of 2007

October 16, 2007

The nation’s bank holding companies increased their total insurance revenue 1.0 percent to $21.7 billion in the first half of 2007 from $21.4 billion during the same period in 2006. CitiGroup (NY), Wells Fargo & Company (CA), and HSBC North America Holdings Inc. (IL) led all bank holding companies with significant banking activities in total insurance fee income in the first six months of 2007, according to findings released today by Michael White Associates and the American Bankers Insurance Association.

The findings are based on data reported to the Federal Reserve Board by 951 top-tier large bank holding companies (BHCs). The analysis measures the growth of the bank insurance business and provides some benchmarks that gauge bank insurance performance.

“While the industry’s growth in total insurance revenue was slight in the first half of 2007,” said Valerie Barton, executive director of ABIA, “it was remarkable, especially when one considers that charter conversions and sales of bank agencies to nonbanks represented a loss close to $700 million in BHC insurance income so far this year.”

During the first six months of 2007, 627 bank holding companies (66 percent of all top-level large BHCs reporting) earned some type of insurance-related revenue, compared to 629 in the first half of 2006. In addition, 77 BHCs reported earning some insurance underwriting fee income from underwriting or reinsurance activities, down from 81 BHCs a year ago.

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 noninterest income. Other findings include:

– BHCs’ insurance brokerage fee income climbed 2.0 percent from $6.13 billion in the first half of 2006 to $6.26 billion in the first half of 2007, as 621 bank holding companies (65.3 percent of all top-level large BHCs reporting) engaged in sales activities that produced insurance brokerage fee income.

– Joining the top 50 in total insurance revenue during the first half of 2007 were Central Community Corp. (TX), Barclays Group US Inc. (DE), Stifel Financial Corp. (MO), Santander Bancorp (PR), The South Financial Group (SC), Bremer Financial Corp. (MN), and Valley National Bancorp (NJ).

Central Community Corp. (TX) increased its rank in total insurance income the most, having jumped from 155th place at mid-2006 to 35th at June 30, 2007. Santander Bancorp and Bancwest Corp. also jumped fairly dramatically, rising, respectively, from the 61st and 36th positions in 2006 to 45th and 25th places on June 30, 2007.

Sources:
American Bankers Insurance Association,
www.theabia.com

Michael White Associates,
www.BankInsurance.com

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