NU Online News Service, Oct. 20, 2:57 p.m.EDT

BB&T Corp. says income from its insurance-services segmentdropped 4 percent in the third quarter, but the company expects tosee improvement in the fourth quarter.

The Winston-Salem, N.C.-bank says insurance income was down $11million from the same period last year, to $241 million.

On a quarter-to-quarter basis, insurance decreased 19 percent,or $58 million, “primarily due to a seasonally stronger secondquarter,” BB&T says.

BB&T owns the middle-market insurance-brokerage firmBB&T Insurance Services Inc.

For the first three months of this year, the bank says insuranceincome is down less than 1 percent, or $2 million, to $790million.

During a conference call with analysts today, Daryl Bible, thecompany's chief financial officer, says fourth-quarter insuranceincome is expected to rebound, helping to improve fee incomeoverall.

Overall, BB&T says third-quarter net income rose 69 percent,or $152 million, to $371 million from the same period lastyear.

For the first three months of this year, net income rose 46percent, or $295 million, to $932 million from last year.

Kelly S. King, chairman and chief executive officer, tellsanalysts that this was “the best quarter in three years” despitethe fact that the nation is in period of protracted slow growththat he believes will continue “for some time.”

Commenting on the insurance segment, King says the soft marketis still leading to rate declines, but there is more indicationthat rates are beginning to harden, especially in the wholesalearea. Insures, he says, are also experiencing earnings pressure,the will push them to increase rates.

In his opinion, “we're right at the cusp to see some hardening.”He adds that the firm's business has not “dropped as much as ourcompetitors.”

During the quarter, BB&T Insurance Services expandedoperations with the acquisition of Liberty Benefit Insurance Services of San Jose, Calif. The firmis a full-service employee benefits broker working with largecommercial clients to help them manage “rising health care costs,changing regulations and complex benefits administration.

The firm also entered the metro-Baltimore area, acquiring Atlantic Risk Management Corp. of Columbia, Md.Atlantic Risk is a property and casualty and employee benefitsbroker.

In response to a question, King says acquisitions are expectedto continue in the insurance space, reaching a “normalized paceover the next two to three years.” He notes that last year the firmmade no acquisitions because of the acquisition downturn.

“We're back in that game,” he says.

So far, financial results from insurance brokerage firms hasbeen mixed.

On Monday, Wells Fargo Insurance Services reported income increased 7 percent on a year-to-year basis,while dropping 26 percent on a quarter-to-quarter basis.

On Tuesday, Brown & Brown said organic growth remains astruggle, saying its own results net income for the thirdquarter was virtually flat.