The nation’s bank holding companies reported their insurance brokerage fee income grew more than 10 percent in 2006, while total insurance revenue decreased 1.3 percent–a drop attributed to a reduction in the number of firms reporting.
The Michael White Associates consulting firm in Radnor, Pa., and the Washington-based American Bankers Insurance Association released the findings today based on data reported to the Federal Reserve Board by top-tier bank holding companies.
The organizations said total insurance revenue went from $44.1 billion in 2005 to $43.5 billion in 2006.
The White firm and ABIA analysis measures the banking industry’s insurance business and provides some benchmarks that gauge bank insurance performance.
“While the industry’s insurance underwriting activities registered a decline of 5.2 percent, its insurance brokerage fee income continued growing, increasing 10.6 percent in 2006,” said Michael D. White, president of MWA.
“Among the top-50 in insurance revenue, the mean ratio of insurance revenue to noninterest income was 14.8 percent in 2006, so insurance activities continue to make increasingly meaningful contributions to banking revenues,” he added.
Brokerage income went from $10.98 billion in 2005 to a record $12.14 billion in 2006, as 656 bank holding companies–67 percent of all top-level BHCs reporting–engaged in sales activities producing insurance brokerage fee income, compared to 1,428 in 2005, the report said.
It was explained that fewer bank holding companies reported total insurance revenues in 2006 because the Federal Reserve redefined “small” BHCs as those with less than $500 million, instead of $150 million, in consolidated assets.
The total number of BHCs that must report detailed fee income information was reduced by 1,317, while the number of BHCs that reported total insurance fee income in 2006 fell by 791.
“While insurance underwriting income has grown at a compound annual rate of 3.1 percent since 2001, insurance brokerage fee income has been racing upward at a compound yearly average of nearly 20 percent during that same period,” according to ABIA Executive Director Valerie Barton.
She said that while brokerage income growth was slowed in 2006 by softening of property-casualty premiums and declines in some agencies’ contingent commissions, “insurance brokerage remains healthy, and the prospects for continued growth in bank insurance revenues are very positive.”
The top-five BHCs for insurance income were:
o Citigroup Inc., New York–$3.2 billion.
o Wells Fargo & Company, San Francisco–$1.34 billion.
o Countrywide Financial, Calabasas, Calif.–$1.21 Billion.
o HSBC North America Holdings, Prospect Heights, Ill.–$1.07 billion.
o BB&T Corp., Winston Salem, N.C.–$812 million.
Copies of MWA’s reports can be obtained from MWA by calling 610-254-0440, or by visiting www.BankInsurance.com.