Bank Insurance Sales

Bank Insurance Sales

The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (GLB) removed many of the Depression-era barriers that restricted affiliations between banks, securities firms and insurance companies. The arrangement that provided the major impetus for the passage of GLB, Citigroup’s merger with Travelers Insurance Group, was short lived, with Citigroup selling off its Travelers property/casualty insurance and life insurance units in 2002 and 2005, respectively. The “financial supermarkets” envisioned by GLB have not transpired. Instead, banks have tended to concentrate on distributing insurance products by buying existing agencies and brokers rather than by setting up their own agencies or purchasing insurers. For their part, insurance companies have set up thrift or banking divisions rather than buying existing banks. The 2007 to 2009 recession and resulting regulatory changes prompted some structural changes in the financial services industry, with some insurers selling their banking units.

BANK HOLDING COMPANY INSURANCE BROKERAGE, UNDERWRITING AND TOTAL INSURANCE FEE INCOME, 2010-2014 (1)

  Insurance brokerage fee income (2)
  Reporting insurance
brokerage fee income
     
Year Number Percent (3) Insurance brokerage
fee income
($ billions)
Average insurance
brokerage fee
income
Median insurance
brokerage fee
income (4)
2010 592 65.1% $7.05 $11,916,748 $131,500
2011 606 65.2 7.70 12,702,413 119,000
2012 665 63.2 6.20 9,318,084 123,000
2013 664 62.5 6.22 9,360,139 117,500
2014 650 61.8 5.71 8,784,272 127,000
  Insurance underwriting fee income
  Reporting insurance
underwriting fee income 
     
Year Number  Percent (3) Insurance
underwriting
fee income
($ billions)
Average insurance
underwriting fee
income
Median insurance
underwriting fee
income (4)
2010 67 7.4% $7.16 $106,825,388 $452,000
2011 63 6.8 5.09 80,756,651 360,000
2012 66 6.3 4.41 66,769,970 503,000
2013 60 5.7 4.00 66,645,533 581,000
2014 59 5.6 3.57 60,535,390 1,000,000
  Total insurance fee income
  Reporting total insurance
 fee income
     
Year Number  Percent (3) Total insurance
fee income
($ billions)
Average total
insurance fee
income
Median total
insurance fee
income (4)
2010 594 65.3% $14.21 $23,925,953 $156,000
2011 608 65.5 12.79 21,028,595 133,000
2012 670 63.6 10.60 15,825,887 141,000
2013 669 63.0 10.21 15,267,360 141,000
2014 655 62.3 9.28 14,170,023 150,000

(1) Bank holding companies (BHCs) own one or more banks. Excludes MetLife, Inc., which during some of these years was a financial holding company subject to reporting and supervision to the Federal Reserve Board. Other traditional insurers were similarly excluded from these findings.
(2) Income from nonunderwriting activities, mostly from insurance product sales and referrals, service charges and commissions, and fees earned from insurance and annuity sales.
(3) Percent of top-tier BHCs defined by the Federal Reserve with consolidated assets in excess of $500 million.
(4) Represents the midpoint. Half are above the median and half are below.

Source: Michael White's Bank Insurance Fee Income Report - 2015.

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TOP 10 BANK HOLDING COMPANIES BY INSURANCE BROKERAGE FEE INCOME, 2013-2014 (1)

($000)

      Insurance brokerage fee income  
Rank Bank holding company State 2013 2014 Percent
change,
2013-2014
Percent of
noninterest
income,
2014
2014 Assets
1 BB&T Corporation North Carolina $1,377,772 $1,504,913 9.23% 39.84% $186,810,156
2 Wells Fargo & Company California 1,463,000 1,317,000 -9.98 3.30 1,687,154,000
3 Citigroup Inc. New York 733,000 721,000 -1.64 2.47 1,842,415,000
4 American Express Company New York 184,000 184,000 (2) 0.64 158,588,000
5 Regions Financial Corporation Alabama 114,412 124,036 8.41 6.44 119,888,669
6 Bancorpsouth, Inc. Mississippi 98,141 115,237 17.42 45.58 13,326,530
7 Morgan Stanley New York 99,000 76,000 -23.23 0.25 798,815,000
8 First Command Financial Services Texas 76,736 75,599 -1.48 31.79 929,910
9 Discover Financial Services Illinois 78,906 72,527 -8.08 4.23 82,801,232
10 First Niagara Financial Group, Inc. New York 72,558 71,125 -1.97 24.30 38,492,000

(1) Bank holding companies own one or more banks. Includes income from nonunderwriting activities, mostly insurance product sales and
referrals, service charges and commissions, and fees earned from insurance and annuity sales.
(2) Less than 0.01 percent.

N/A=Not applicable.

Source: Michael White's Bank Insurance Fee Income Report - 2015.

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TOP 10 BANK HOLDING COMPANIES BY INSURANCE UNDERWRITING NET INCOME, 2014 (1)

($000)

Rank Bank holding company State Total insurance
underwriting
net income
Total net
income/loss
Insurance net
income as a
percent of total
net income
2014 Assets
1 Wells Fargo & Company California $704,000 $23,057,000 3.05% $1,687,154,000
2 Citigroup Inc. New York 351,000 7,313,000 4.80 1,842,415,000
3 Ally Financial Inc. Michigan  173,000 1,150,000 15.04 151,828,000
4 American Express Company New York 85,000 5,885,000 1.44 158,588,000
5 BB&T Corporation North Carolina 51,742 2,151,093 2.41 186,810,156
6 Old National Bancorp Indiana 44,832 103,667 43.25 11,647,778
7 Bank of America Corporation North Carolina 34,000 4,833,000 0.70 2,100,265,000
8 The PNC Financial Services Group, Inc. Pennsylvania 18,085 4,184,251 0.43 345,243,081
9 Hilltop Holdings, Inc. Texas 16,615 111,650 14.88 9,238,537
10 The Goldman Sachs Group, Inc. New York 11,000 8,477,000 0.13 853,125,000

(1) Bank holding companies own one or more banks.

Source: Michael White's Bank Insurance Fee Income Report - 2015.

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