A report on bank holding companies finds they have increased their total insurance revenues by 19 percent to $44 billion in 2005 from $37 billion the year before.

The study released today by Michael White Associates, a banking consulting firm in Radnor, Pa., and the American Bankers Insurance Association, based in Washington, D.C., said 1,428 bank holding companies earned some type of insurance-related revenue in 2005, compared with 1,422 in 2004.

“This study shows that a growing number of consumers are depending on their local banks to meet their insurance needs,” said Valerie Barton, ABIA associate director, in a statement. “And, banks are listening to their customers and offering more financial planning products under the same roof, including insurance, since the enactment of the Gramm-Leach-Bliley Act.”

Michael White, president of the consulting firm, said that while insurance brokerage fee income was up 14 percent in 2005, banks have experienced an annual compound growth rate on income of 22 percent since 2001.

He said banks will continue to increase their insurance income by continuing to acquire insurance agencies, integrating existing agencies and cross-selling.

The top two bank holding companies earned more than $4 billion in income. They were Citigroup Inc., based in New York, with $3.1 billion, and Wells Fargo & Company, based in San Francisco, at $1.22 billion, according to the report.

Mr. White explained in an interview that the Federal Deposit Insurance Corporation, whose data the report is based on, does not break the figures down by property-casualty and life and health business lines.

He noted that the businesses are usually comprised of a mix of insurance businesses and can include underwriting, retail and wholesale business.

Citigroup, he noted, owns Primerica, a life and health underwriter. At one time it also owned Travelers Insurance, which was spun off on its own before being acquired by St. Paul to form St. PaulTravelers.

Wells Fargo owns some life and health business, but the insurance brokerage firm Acordia contributes a substantial amount to the insurance income, according to ABIA.

BB&T Corporation, ranked sixth on the list at $714 million, owns CRC Insurance Services, a major wholesale brokerage firm. The Winston-Salem, N.C.-based bank also owns retail agencies.

Mr. White pointed out that banks are abandoning credit insurance products (which accounted for significant insurance income) for credit canceling products, which are considered banking products and not subject to insurance regulation.

The report also noted that joining the ranks of the top 50 in insurance revenue during the first half of 2005 were Capital One Financial Corporation, Bancwest Corp., Hancock Holding Company and F.N.B Corp.

Bancwest increased its rank jumping from 76th place in 2004 to 38th in 2005. Hancock Holding also made a dramatic jump, going from 61st to 42nd.

Special Reports /

Banks Increasing Insurance Revenue

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