The insurance industry is beginning to come out of the soft market, meaning improved earnings for insurance brokers, according to Kelly S. King, chief executive officer with Winston-Salem, N.C.-bank BB&T.
"We're just beginning to see the silver lining on the soft market," said Mr. King during a conference call with analysts to discuss the company's fourth-quarter results, which saw net income drop 26 percent.
BB&T, which owns the brokerage firm BB&T Insurance Services and wholesale broker CRC, said at the wholesale end some hardening in prices is beginning to take place, and when that occurs, the retail market soon follows.
He said the major cause for this turn in the marketplace is degradation in capital carriers have experienced through losses in their investment portfolios.
Despite their losses, he said insurers are "somewhat immune" from the worst that the rest of the financial services market is experiencing.
Unlike other brokers who have been having problems continuing to grow in the soft market, Mr. King said BB&T brokerage has continued to grow organically.
The bank reported last week that insurance commissions grew by close to 12 percent in the fourth quarter, rising $26 million to $247 million.
For the year, insurance commissions rose almost 9 percent, or $75 million, rising from $853 million in 2007 to $928 million last year.
The bank as a whole reported fourth-quarter net income dropped 26 percent, or $106 million, to $305 million. Earning per share dropped from 75 cents in 2007 to 51 cents a share.
For the year, net income dropped 12 percent, or $215 million, to $1.5 billion. Earnings per share fell from $3.14 a share in 2007 to $2.71.
While BB&T experienced much of the same economic strains others have gone through, Mr. King said unlike others, the bank is looking "for all the good loans we can find."
He added that once the banking industry gets through the current economic crisis, "we are going to see some of the best times in commercial banking we've ever seen in our lives."
The major stumbling block to recovery, he continued, is to find a floor for pricing in the housing market. He said improvements in the economy should begin nationally by the end of the year, and some stabilizing in housing prices in already taking place in Atlanta where some buying is beginning to take place.
"We are beginning to see that light at the end of the tunnel," Mr. King said.
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