Insurance brokerage fees held their own despite the pressures from a soft market and changes in reporting by some banks, said a bank insurance consultant.
The "Michael White--Symetra Bank Fee Income Report" shows banks' insurance brokerage fee income reached a total of $4.04 billion, just 0.8 percent less than a record $4.08 billion banks made in 2006.
The report, compiled by the consulting firm Michael White Associates based in Radnor, Pa., is based on data reported by 7,707 commercial and FDIC-regulated savings banks.
Close to half of the reporting banks (46 percent) reported that part of their income was produced through insurance brokerage revenue. The fee income consists of commissions and fees earned from sales and referrals of credit, life, health, property-casualty and title insurance. The numbers do not include income derived from the sale of annuities.
Michael White, president of Michael White Associates, told National Underwriter that seven of the top 10 banks in the insurance brokerage fee income list earned a significant portion of their insurance fees through p-c insurance transactions.
Leading the banks whose insurance sales are dominated by p-c insurance transactions is Branch Banking and Trust Co. (BB&T), which increased its fee income by close to 5 percent, rising $37.5 million to $837 million. Insurance brokerage accounted for 34 percent of the bank's noninterest income.
BB&T was number two on the list after Citibank, NA, with insurance sales primarily on the life side, which produced $1.2 billion in insurance fee income.
The report notes that BB&T is the most active acquirer of insurance agencies among banks that own their brokerage firms, as opposed to those that operate insurance brokerage firms as separate entities. For example, Wells Fargo Bank operates Wells Fargo Insurance brokerage as a separate unit.
Seventy percent of banks with over $10 billion in assets continue to have the highest participation, producing $3.2 billion in insurance fee income, and accounted for 79 percent of all bank insurance brokerage fee income earned in 2007, the report said.
The next largest bank with a significant p-c fee income is Commerce Bank/North coming in at number five with $85 million. However, that will change because Commerce Bank was purchased by TD Banknorth, N.A., which came in ninth on the list at $56 million.
TD is big in insurance in New England and Canada, said Mr. White, but will not benefit on the insurance end because Commerce sold the commercial insurance brokerage to George E. Norcross III, the brokerage's chairman, and Michael Tiagwad, Commerce Insurance Services president, back in January.
Commerce retained ownership of its personal lines business.
Mr. White also noted that the fees for 2007 would have equaled 2006 if it had not been for some banks switching their charter to OTS-regulated thrifts that do not report insurance brokerage income.
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