Bank Holding Cos' Insurance Revenue Hits $23.7 Billion

U.S. bank holding companies increased their total insurance revenue 9.5 percent to $23.7 billion in the first half of 2008 from $21.7 billion during the same period in 2007, a new report says.

However, the number of bank holding companies reporting insurance income decreased slightly, according to findings by Michael White Associates bank insurance consulting firm in Radnor, Pa., and the American Bankers Insurance Association in Washington.

Total insurance income for the top three in the first half was: CitiGroup, $1.69 billion; Wells Fargo & Company, $1.05 billion and BB&T Corp., $448 million.

Other banks in the top-10 were: Bank of America Corp., $324 million; HSBC North America Holdings Inc. $275 million; JPMorgan Chase & Co., $203 million; Wachovia Corp. $168 million; National City Corp., $66 million; Regions Financial Corp, $59 million and Bancorp South Inc., $46 million.

The findings are based on data reported to the Federal Reserve Board by 946 top-tier large bank holding companies. The analysis measures the growth of the bank insurance business and provides some benchmarks that gauge bank insurance performance.

Valerie Barton, executive director of ABIA said in a statement that, "The top 50 bank holding companies in insurance revenue attained a mean ratio of insurance to noninterest income of 14.3 percent."

That level of insurance concentration, she added, demonstrates considerable contribution to bank holding companies' noninterest income.

"Insurance consistently proves it is a valuable revenue-generating activity during good times and bad times. Those institutions that engage in it are glad to have the additional income for diversification of their revenue sources and for their bottom lines," said Ms. Barton.

During the first six months of 2008, 607 bank holding companies (64.2 percent of all top-level large BHCs reporting) earned some type of insurance-related revenue, compared to 627 in the first half of 2007. In addition, 67 BHCs reported earning some insurance underwriting fee income from underwriting or reinsurance activities, down from 77 BHCs a year ago.

The analysis includes a ranking of the top 50 bank holding companies on the basis of the absolute dollar amount of total insurance revenue (earnings from sales and underwriting) and on the basis of total insurance revenue as a percentage of the institution's total noninterest income. Other findings include:

Bank holding companies insurance brokerage fee income climbed 3 percent from $6.26 billion in the first half of 2007 to $6.44 billion in the first half of 2008, as 603 bank holding companies (63.7 percent of all top-level large BHCs reporting) engaged in sales activities that produced insurance brokerage fee income

Joining the top 50 in total insurance revenue during the first half of 2008 were nine BHCs: National Penn Bancshares, CoBiz Financial, Inc., Shore Bancshares, Inc., Encore Bancshares, Inc., Tompkins Financial Corporation, VIST Financial Corp., First Bancorp, Doral GP Ltd., and Comerica Incorporated.

Among the top 50, BBVA USA Bancshares, Inc. increased its rank in total insurance income the most, having jumped from 81st place at mid-2007 to 14th at June 30, 2008. Encore Bancshares, Inc. and Huntington Bancshares Inc. also increased "fairly dramatically", rising, respectively, from the 72nd and 42nd positions in 2007 to 41st and 12th places, the report said.

The ABIA is the separately chartered insurance affiliate of the American Bankers Association (ABA) and is the only Washington, D.C.-based full service association for bank insurance interests.