U.S. bank holding companies increased their total insurance revenue by 9.5 percent to $23.7 billion in the first half of 2008, up from $21.7 billion during the same period last year, a new report says.
However, the number of bank holding companies reporting insurance income decreased slightly, according to findings by Michael White Associates (a bank insurance consulting firm in Radnor, Pa.) and the American Bankers Insurance Association (the separately chartered insurance affiliate of the American Bankers Association in Washington).
The findings are based on data reported to the Federal Reserve Board by 946 top-tier bank holding companies. The analysis measures the growth of the bank insurance business and provides some benchmarks that gauge bank-insurance performance.
"The top-50 bank holding companies in insurance revenue attained a mean ratio of insurance to non-interest income of 14.3 percent," ABIA Executive Director Valerie Barton said in a statement.
That level of insurance concentration, she added, demonstrates considerable contribution to bank holding companies' non-interest 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 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 non-interest income. Other findings include:
o Bank holding companies' insurance brokerage fee income climbed 3 percent, from $6.26 billion in the first half of 2007 to $6.44 billion this year.
o 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 Corp., VIST Financial Corp., First Bancorp, Doral GP Ltd. and Comerica Inc.
Among the top 50, BBVA USA Bancshares Inc. increased its rank in total insurance income the most, jumping from 81st place at mid-2007 to 14th as of 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 place today.
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