Total Bank Insurance Revenue Up Slightly in 2007

April 15, 2008

The nation’s bank holding companies experienced a slight increase of 0.5 percent in their total insurance revenue from $43.5 billion in 2006 to $43.7 billion in 2007.

Citigroup Inc. (N.Y.), Wells Fargo & Co. (Calif.), HSBC North America Holdings (Ill.), BB&T Corp. (N.C.), and Bank of America Corp. (N.C.) led all bank holding companies with significant banking activities in total insurance fee income in 2007, according to findings released today by the American Bankers Insurance Association and Michael White Associates.

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.

“Among the top 50 in insurance revenue, the mean ratio of insurance revenue to non-interest income was 13.4 percent in 2007,” said Michael D. White, president of MWA. “For those BHCs engaged in them, insurance activities continue to make meaningful contributions to banking net operating revenues.”

To view the chart go to: http://www.aba.com/aba/documents/press/insurance_income_chart.pdf

During 2007, 637 bank holding companies (or 68.1 percent of all top-level BHCs reporting) earned some type of insurance-related revenue, compared to 642 in 2006. BHC insurance brokerage fee income increased 1.0 percent from $12.13 billion in 2006 to a record $12.26 billion in 2007, as 632 bank holding companies (or 67.5 percent of all top-level BHCs reporting) engaged in sales activities that produced insurance brokerage fee income.

“Insurance brokerage fee income had been racing upward at a compound annual growth rate of 19.5 percent from 2001 through 2006,” said Valerie Barton, executive director of the American Bankers Insurance Association. “It flattened out in 2007 due to softening property-casualty premiums, changes in bank charters to thrifts that do not report insurance brokerage income, and a few sales of large property-casualty agencies by banks whose particular circumstances, strategic aims, and commitment to insurance had changed. Insurance brokerage remains healthy, and the prospects for a resumption of 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.

Joining the top 50 in total insurance revenue in 2007 were Barclays Group US Inc. (Del.), Central Community Corp. (Texas), Utrecht-America Holdings Inc. (N.Y.), Stifel Financial Corp. (Mo.), Santander Bancorp (Puerto Rico), Leesport Financial Corp. (Pa.), Tompkins Financial (N.Y.), First Bancorp (Pa.), and Valley National Bancorp (N.J.).

Utrecht-America Holdings Inc. (N.Y.) increased its rank in total insurance income the most, having jumped from 609th place at the end of 2006 to 33rd by year-end 2007. Central Community Corp. (Texas) jumped 156th to 33rd place in the rankings. Also jumping two digit’s worth of ranks were Huntington Bancshares (Ohio), Capital One Financial (Va.), SunTrust Banks Inc. (Ga.), Bancwest Corp. (Hawaii), and Tompkins Financial Corp. (N.Y.).

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

Michael White Associates, www.BankInsurance.com

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