Bank Insurance Revenue Down Slightly In First Six Months

NU Online News Service, Oct. 27, 1:34 p.m. EDT

Insurance revenue at U.S. banks was off by $100 million in the first six months at $23.6 billion compared to $23.7 billion during the first half of 2008, a consulting firm reported.

The findings were released by Michael White Associates, the Radnor, Pa., consulting firm, and the American Bankers Insurance Association in Washington.

According to the report, GMAC, Southfield, Mich.; CitiGroup, New York; Wells Fargo & Company, San Francisco; and BB&T Corporation, Winston Salem, N.C., led all bank holding companies with significant banking activities in total insurance fee income in the first six months of 2009.

Michael White Associates (MWA) said its findings are based on data reported to the Federal Reserve Board by 932 top-tier large bank holding companies, and 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, "The top 50 bank holding companies in insurance revenue attained a mean concentration ratio of total insurance revenue to noninterest income of 13.6 percent.

She noted, "Among the top 50 in this Concentration Ratio, the mean was 45.9 percent. Those levels of Insurance Concentration demonstrate considerable contribution to BHCs' noninterest income. Insurance consistently proves it is a valuable revenue-generating activity during good times and bad times."

MWA found that during the first six months of 2009, 581 large top-tier bank holding companies (62.3 percent of all top-level large BHCs reporting) earned some type of insurance-related revenue, compared to 568 in the first half of 2008.

In addition, 56 BHCs reported earning some insurance underwriting fee income from underwriting or reinsurance activities, up from 52 BHCs a year ago.

Bank insurance underwriting and reinsurance income increased 1.3 percent from $17.3 billion at June 30, 2008 to $17.5 billion in the first half of 2009, as 56 bank holding companies (6 percent of all top-level large BHCs reporting) engaged in sales activities that produced insurance underwriting fee income.

Joining the top 50 in total insurance revenue during the first half of 2009 were nine BHCs: GMAC Inc.; Goldman Sachs Group Inc., New York; American Express Company, New York; Discover Financial Services, Riverwoods, Ill.; Armed Forces Benefit Association, Alexandria, Va.; Morgan Stanley, New York; CIT Group Inc., New York; and NBT Bancorp Inc., New York.

Except for NBT Bancorp, the other new entrants into the top 50 were all newly chartered bank holding companies. As a result of the entry of the new bank holding companies, all previously top-ranked BHCs declined in the rankings. NBT Bancorp Inc. increased its rank in total insurance income, having jumped from 129th place at mid-2008 to 40th at June 30, 2009.

For the top five BHCs, the total insurance income listed was: GMAC Inc., $1.7 billion; Citigroup, $1.5 billion; Bank of America, $1.4 billion; Wells Fargo, $1.2 billion; and BB&T, $534 million.