Michael White Associates: Bank Holding Company Insurance Brokerage Fee Income Up Just 0.3% in 2013
May 14, 2014 by Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com
RADNOR, Pa. – Bank holding companies recorded $6.22 billion in brokerage fee income from selling insurance in 2013, up just 0.3% from 2012, according to a report compiled by Michael White Associates, a bank insurance consulting firm. And despite posting a decline, Wells Fargo & Co. ranked No. 1 in the United States in insurance brokerage fee income last year, according to the report.
The flat performance last year generally was due to 20 large banking companies that combined, accounted for a decline of $732 million in insurance brokerage income. In particular, two bank holding companies, the New York-based Citigroup Inc. and the Calif.-based Wells Fargo & Co., accounted for most of the industry’s reverse, with a decline of more than $531 million combined, the bank insurance fee income report by Michael White Associates and sponsored by Succeed Financial Advisors shows.
Of 1,062 large top-tier bank holding companies, 62.5% engaged in insurance brokerage activities last year. Insurance brokerage fee income includes commissions and fees earned by a bank holding company or its subsidiary from insurance product sales and referrals of credit, life, health, property, casualty, and title insurance.
In 2013, Wells Fargo ranked No. 1 in the United States, with insurance brokerage fee income of $1.46 billion, according to the report. The North Carolina-based BB&T Corp., which owns more agencies than any other financial holding company, ranked second nationally, at $1.38 billion; and Citigroup, whose insurance income dropped by $438 million, ranked third, with $733 million in insurance brokerage revenue, the report says.
According to Best’s Review magazine’s annual ranking, Wells Fargo Insurance Services is the fifth-largest global insurance broker based on 2012 total revenues of $1.85 billion. BB&T Insurance Services Inc. was the sixth-largest based on total revenues of $1.56 billion in 2012, according to the Best’s Review ranking.
Bank holding companies with more than $10 billion in assets continued to have the highest participation, at 81.3%, in insurance brokerage activities, according to the report. They produced $5.25 billion in insurance fee income in 2013, down 0.8% from 2012.
One-third of bank holding companies that built or acquired million-dollar insurance brokerages “experienced double-digit increases in brokerage income, signaling a condition of financial health at their agencies, specifically those agencies focused in the property and casualty sector,” Robert Seda, president of Succeed Financial Advisors, said in a statement.
The report benchmarks the banking industry’s performance in generating insurance brokerage and underwriting fee income.
“There was not much change in 2013 from 2012 in the expansion of insurance revenues among most BHCs that generated $1 million in insurance brokerage in 2013,” said Michael White, president of Michael White Associates, in a statement.
