Insurance Revenues For Banks Up 1%

Bank holding companies' insurance revenues increased 1 percent for the first half of this year, a trade group reported.

The statistic was announced by American Bankers Insurance Association in Washington, D.C., and the Radnor, Pa.-based Michael White Associates consulting firm.

In their quarterly report on bank holding companies, ABIA and Michael White found insurance revenues rose $300 million to $21.7 billion for the first half of 2007.

The report examined data from 951 large bank holding companies as reported to the Federal Reserve Board.

Valerie Barton, executive director of ABIA, said in a statement, "While the industry's growth in total insurance revenue was slight in the first half of 2007, it was remarkable, especially when one considers that charter conversions and sales of bank agencies to nonbanks represented a loss close to $700 million in bank holding company insurance income so far this year."

Charter changes took place when bank holdings companies became thrift holding companies, which are not required to report the same amount of detail and do not report brokerage income.

The report noted other banks had sold their p-c lines to major brokerage firms, mentioning the three banks that sold their operations to Hub International, Ltd., and JPMorgan Chase's decision to sell its p-c agency to Brown & Brown.

The report also noted the soft market cycle lowering insurance prices as a contributing factor to slower revenue growth.

The two major p-c brokers, Wells Fargo & Company and BB&T Corporation, placed second and fourth, respectively, on the top ten list of bank holding companies, with Citigroup Inc. taking the top spot.

Citigroup (which sells life and accident insurance) held the top spot from last year, with $1.7 billion in insurance income, followed by Wells Fargo, which retained its second place slot, with $831 million.

BB&T moved from sixth place last year to fourth, totaling $426 million in insurance income. In third place was HSBC North America Holdings, owned by London-based HSBC Group, with $456 million.

On Oct. 1, Wells Fargo closed on its deal to purchase Greater Bay Bancorp, which ranked eighth on the list at $88 million. Combining the two would still leave Wells Fargo in second at $919 million.

The report said brokerage fee income rose 2 percent from $6.13 billion to $6.26 billion in the first half of 2007, with 621 bank holding companies--65 percent of those banks reporting--engaged in sales that produced commission and fees.

Bank holding companies that engaged in underwriting (only 8 percent, or 77 banks) saw their underwriting and reinsurance income increase less than 1 percent to $15.4 billion from $15.3 billion for the same period last year.