Bank Insurance Brokerage Fee Income Up 15% in Q1

August 4, 2009

First-quarter bank holding company (BHC) insurance brokerage income of $3.03 billion was up 15.0 percent from $2.63 billion in fourth quarter 2008, which marked the lowest point of quarterly insurance income since 2005, according to the Michael White-Prudential Bank Insurance Fee Income Report.

Despite this increase, BHC insurance brokerage fee income declined 5.7 percent to $3.03 billion in first quarter 2009, down from a then-record $3.21 billion in first quarter 2008. Thus far in 2009, 59.9 percent of BHCs engaged in insurance brokerage activities.

Compiled by Michael White Associates (MWA) since 2001 and sponsored for the first time by Prudential’s Individual Life Insurance business, this report measures and benchmarks the banking industry’s performance in generating insurance brokerage and underwriting fee income. Results are based on data from all 7,447 commercial and FDIC-supervised savings banks and 940 large top-tier bank holding companies operating on March 31, 2008.

Bank holding company insurance brokerage fee income consists of commissions and fees earned by a bank holding company or its subsidiary from insurance product sales and referrals of credit, life, health, property, casualty, and title insurance.

Among companies with significant banking activities as of March 31, 2009, Wells Fargo & Co. (CA) topped the leader board with insurance brokerage earnings of $483.0 million compared to $443.0 million in Q1 2008, a 9.03 percent increase. Citigroup Inc. (NY) ranked second nationally with $250.0 million in insurance brokerage fee income compared to $460.0 million in Q1 2008, a 45.65% decline. BB&T Corporation (NC), which owns more agencies than any other financial holding company, ranked third with $226.8 million in insurance brokerage revenue in first quarter 2009 compared to $199.2 million in Q1 2008, a 13.83 percent increase.

Bank holding companies over $10 billion in assets continued to have the highest participation (90.8 percent) in insurance brokerage activities. These BHCs produced $2.82 billion in insurance fee income in first quarter 2009, 6.4 percent less than the $3.02 billion they produced in first quarter 2008. These large bank holding companies accounted for 93.2 percent of all BHC insurance brokerage fee income earned in first quarter 2009.

“While the economy has had a negative impact on sales of insurance through banks, it’s important to note that insurance brokerage income was up substantially for first quarter 2009 and not far off from record highs in first and second quarters of 2008,” said Joan H. Cleveland, senior vice president, Business Development with Prudential’s Individual Life Insurance business.

Among BHCs with between $1 billion and $10 billion in assets, leaders in insurance brokerage income in first quarter 2009 included Eastern Bank Corp. (MA), Old National Bancorp (IN), Trustmark Corp. (MS), and Johnson Financial Group Inc. (WI). BHCs of this size registered a 7.8 percent increase in insurance brokerage income to $167.7 million in first quarter 2009, up from $155.5 million in first quarter 2008.

Among BHCs with assets between $500 million and $1 billion, leaders were 473 Broadway Holding Corp. (NY), Texas Independent Bancshares (TX), and First Manitowoc Bancorp Inc. (WI). The smallest community banks, those with assets less than $500 million, were used as “proxies” for the smallest BHCs, which are not required to report insurance brokerage income. Leaders among bank proxies for small BHCs were Soy Capital Bank and Trust Co. (IL), Spirit of America National Bank (OH), and Hoosac Bank (MA).

Source: Michael White-Prudential Bank Insurance Fee Income Report

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