BB&T Says Insurance Continues Growth

BB&T Corp. reported its second-quarter net income dropped nearly 7 percent, but its insurance brokerage arm grew nearly 4 percent despite the pressures of falling prices

As a whole, for the second quarter Winston-Salem, N.C.-based BB&T reported net income dropped by $30 million, to $428 million. This translated into a 5 cent decline in earning per share to 78 cents a share. The results beat analyst's consensus estimates on earnings per share of 68 cents a share.

BB&T said income from insurance operations increased 3.5 percent to a record $237 million during the second quarter of this year compared to $229 million for the same period last year.

The increase was primarily due to new product initiatives introduced during the second quarter, the bank said.

For the first six months, net income fell off $23 million, or close to 3 percent, to $856 million. Earnings per share, compared to the same period last year, were down 4 cents to $1.56 a share.

John A. Allison, chairman and chief executive officer of BB&T, called the current economic environment challenging, but what he termed an economic correction would benefit the bank in the long term as "irrational and undisciplined" lenders exit the market, reducing competition and allowing disciplined underwriting to take hold.

Insurance revenues were down 3.9 percent compared to the same period last year, said Mr. Allison, up 22.5 percent on an annualized basis, and flat for the first six months of the year. He said the results "were pretty good" considering rates have fallen 10-to-15 percent on commercial insurance lines.

"That we can have flat revenue this year reflects a pretty major, positive movement in market share from our insurance operations," he said.

On the issue of acquisitions Mr. Allison said the bank is continuing to look for insurance agency opportunities, noting that the company is pleased with its June 2 acquisition of UnionBanc Insurance Services Inc. in San Diego.

He noted that this is a difficult time for a number of independent agents and brokers confronting the soft market, and the bank hopes to announce additional acquisitions in the future. He said BB&T has an extremely efficient insurance operation and the best revenue production per employee in the industry.