Crump Acquisition, Firming Market Boost BB&T Insurance Earnings

The acquisition of wholesale-broker Crump and the firming insurance market lifted fourth-quarter income for BB&T Insurance Services by 43 percent, the Winston-Salem, N.C.-bank BB&T says.

BB&T Corp. says fourth-quarter insurance income earnings were up $108 million to $362 million. For the year, insurance earnings rose 30 percent, or $315 million, to $1.36 billion.

The company says fourth-quarter net income for the segment stood at $39 million, an increase of 56 percent, or $14 million, from the same in 2011. The company did not give a year end breakdown of the segment's profit.

The increase was primarily due to the acquisition of Crump in April, says BB&T, adding approximately $83 million in the quarter. Firming market conditions on the property and casualty side also boosted revenues.

During a conference call with financial analysts, Kelly King, BB&T's chairman and chief executive officer, says the bank is not sitting on its hands and complaining about the state of the economy. Instead, it is taking active measures to increase revenue. Among the initiatives, he mentioned the Crump acquisition, calling it “a huge opportunity” in a number of areas.

One area will be providing life-insurance services to other large banks and financial-services companies that find doing that business in-house too complex.

“Frankly, it has gone extraordinarily well and it is a huge opportunity for us,” says King.

With the acquisition of Crump, insurance now makes up 14 percent of overall revenue for BB&T.

BB&T Corp. reports fourth quarter net income of $549 million, an increase of 37 percent from $400 million for the prior year. Total revenue rose 5 percent, or $122 million, to $2.5 billion.

For the year, net income rose 52 percent, or $696 million, to $2.03 billion. Revenues for the year stand at approximately $9.8 billion, up 13 percent, or over $1 billion.

When asked about the future performance of the insurance segment, Christopher L. Henson, chief operation officer, was highly optimistic of continued organic growth for the next three to five years.

He says that unlike a hard market, with rapid increase in premiums, pricing in the current insurance market is in a “slower migration.”

Organic growth will continue to improve as prices increase, the economy improves, and the need for Crump services grow. He also expects more cross selling internally to the bank's clients and increases in contingent commissions.

“We think '13 will be really challenging, but our businesses are really performing and so, given the economy, we believe we will have another high-performance year in 2013,” says King.