Banks' Insurance Income Rising 9 Percent In ?03

By Steven Brostoff, Washington Editor

NU Online News Service, Dec. 3, 2:40 p.m. EDT,Washington?Insurance income earned by bank holdingcompanies is expected to increase nine percent in 2003 and accountfor an increasing share of non-interest income, according to a newstudy by the American Bankers Insurance Association.[@@]

The study estimates that bank holding companies (excludingMetLife and Citigroup) will earn some $5.8 billion in 2003,compared to $5.3 billion in 2002.

Moreover, insurance income at the top 50 bank holding companies,again excluding MetLife and Citigroup, now accounts for 12.3percent of non-interest income, compared with 10.1 percent in2002.

The study, which was conducted by E. Kenneth Reynolds, managingdirector of the Washington-based ABIA, is based on data provided tothe Federal Reserve in bank holding company consolidated financialstatements.

Mr. Reynolds told National Underwriter that he decidedto exclude MetLife and Citigroup from the study because they arespecial cases.

While MetLife is registered as a bank holding company, Mr.Reynolds said, it is primarily an insurance company. Similarly, hesaid, Citigroup does much of its insurance business throughTravelers.

Moreover, he said, these two companies are so large compared toother bank holding companies in terms of insurance income thatincluding them in the study would distort the results.

Mr. Reynolds noted that as of June 2003, MetLife's insuranceincome was $11.2 billion and Citigroup's was $1.7 billion.

The next-largest bank holding company in terms of insuranceincome, Wells Fargo, reported $556 million, he noted.

Excluding MetLife and Citigroup gives a better picture of whatthe other 1,257 bank holding companies that report insurance incomeare experiencing, Mr. Reynolds said

The study also does not include annuity income sold bysecurities brokerage units of bank holding companies. Includingthis figure, the study said, would significantly increase insuranceincome.

The study found that while insurance income is increasing,insurance fee and commission income for the first six months of2003 declined slightly.

This indicates, the study said, that underwriting andreinsurance income is becoming a larger portion of bank holdingcompany insurance income.

The number of bank holding companies reporting insurance incomedropped slightly during the first six months of the year, goingfrom 1,284 in 2002 to 1,257 in 2003.

The assets of all holding companies reporting insurance incometotal $8 trillion, the study found, which is 93 percent of the $8.7trillion in assets held by bank holding companies as of the end ofJune of 2003.

The study did not identify insurance income by line.