Insurance brokerage fee income for bank holding companies increased 3.2 percent in the first quarter at $3.21 billion up from $3.11 billion for the same period in 2007, according to a new study.
The results set a quarterly record, according to the Michael White-Symetra Bank Holding Company Fee Income Report.
The report, compiled by Michael White Associates, a Radnor, Pa.-based consulting firm, and sponsored by Bellevue, Wash.-based Symetra Financial investment company, measures and benchmarks bank holding companies' performance in generating insurance, retail investment, annuity and mutual fund fee income.
The companies said the study is based on data reported by nearly 1,000 top-tier large bank holding companies.
According to the report, bank holding companies' $3.21 billion in first-quarter bank insurance brokerage fee income also represented a 7.5 percent increase from $2.99 billion in fourth-quarter 2007.
Thus far in 2008, 61.4 percent of bank holding companies engaged in insurance brokerage activities, the report said.
The announcement of the results noted that bank holding company insurance brokerage fee income consists of commissions and fees earned by a bank holding company or its subsidiary from insurance product sales and referrals of credit, life, health, property, casualty and title insurance.
It does not include income earned from the sale or servicing of annuities, which was, until 2007, reported as insurance income when the sales were not made by a bank holding company's securities brokerage operations.
Among companies with significant banking activities, the report said, first place went to Citigroup Inc. in New York, which reported insurance brokerage earnings of $460 million as of March 31.
Wells Fargo & Company, San Francisco, ranked second nationally with $443 million in insurance brokerage fee income.
BB&T Corporation, Winston-Salem, N.C., which owns more agencies than any other financial holding company, ranked third with $199.2 million in insurance brokerage revenue.
In fourth place was Bank of America Corp., Charlotte, N.C., with $65.4 million; and fifth place was held by HSBC North America Holdings, Mettawa, Ill., with $43.1 million.
Bank holding companies with over $10 billion in assets continued to have the highest participation (89.9 percent) in insurance brokerage activities, the report said.
The bank holding companies, according to Michael White, produced $3 billion in insurance fee income in the first quarter, 4.8 percent more than the $2.9 billion they produced in first-quarter 2007.
The large bank holding companies accounted for 93.8 percent of all bank holding company insurance brokerage fee income earned in first-quarter 2008, the report said.
Among holding companies under $1 billion in assets, the top five in insurance brokerage fee income in the first quarter were Central Community Corporation, Temple, Texas; First Manitowoc Bancorp Inc., Green Bay, Wis.; Texas Independent Bancshares Inc., Texas City, Texas; 473 Broadway Holding Corporation, New York; and Northeast Bancorp, Auburn, Maine.
The report said the concentration of insurance brokerage fee income as a percent of noninterest income decreased from 6.9 percent to 5.8 percent.
According to Michael White, this ratio of fee income concentration sheds light on how concentrated or meaningful insurance brokerage is among bank holding corporations' nonlending activities.
Eight of the top 15 banks exceeded that mean ratio. Three of them reported insurance brokerage fee income representing more than 27 percent of their noninterest income. Five of the top 15 banks had a ratio greater than 10 percent, according to the report.
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