The report, compiled by Michael White Associates, LLC (MWA) and sponsored by Symetra Financial, measures and benchmarks the banking industry’s performance in generating insurance, investment, and mutual fund and annuity fee income. It is based on data reported by all 7,707 commercial and FDIC-regulated savings banks.
The Bank-FIR reveals that nearly half the banks (45.7%) in the United States engaged in activities that produced insurance brokerage revenue. Bank insurance brokerage fee income consists of commissions and fees earned by a bank or its subsidiary from insurance product sales and referrals of credit, life, health, property, casualty, and title insurance. It does not include income derived from the sale of annuities.
Citibank, N.A. in Nevada reported year-end insurance brokerage fee income of $1.19 billion as of December 31, 2007, putting it in first place. Branch Banking and Trust Company (NC), which has acquired more insurance agencies than any other banking organization, ranked second nationally with $836.9 million in insurance brokerage earnings. FIA Card Services, N.A. (DE), the former MBNA America Bank, N.A., ranked third with $256.6 million in insurance brokerage revenue.
Banks over $10 billion in assets continued to have the highest participation (69.7%) in insurance brokerage activities and produced $3.2 billion in insurance fee income in 2007. These large banks accounted for 79.3% of all bank insurance brokerage fee income earned in 2007.
“The leveling of banks’ insurance brokerage fee income in 2007 resulted from several factors: one, a soft market in commercial insurance; two, a tendency to locate new insurance operations within bank holding company subsidiaries rather than bank subsidiaries; three, the conversion of some banks to OTS-regulated thrifts that do not report insurance brokerage income; and four, the removal of any annuity commissions from the insurance total,” said Dr. Michael White, president of Michael White Associates.
“Combining annuity commissions with insurance brokerage income, total bank production of insurance-product, sales-related fee income was over $5.0 billion,” Dr. White noted. “Historically, banks’ insurance brokerage revenue has constituted about one-third of the banking industry’s total. We’ll see if that continues when aggregate bank holding company or BHC data becomes available in a few weeks. Until then, any attempt to rank BHCs would be speculative guesswork prone to error.
”Despite the leveling of total insurance brokerage revenue, adjusted mean insurance program productivity improved again, rising 4.7% to $1,883 of insurance brokerage income per bank employee from $1,799 in 2006 and 19.9% from $1,571 per bank employee five years ago in 2003. Program productivity measures the generation of income among bank employees, who are important human assets in initiating customer referrals and the attendant fee income earned from customer relationships. Similarly, adjusted mean insurance program density grew 33.3% to $57,668 in insurance brokerage income per bank office in 2007, up from $43,263 five years ago in 2003. Defined as the amount of program fee income per domestic banking office, insurance program density measures the relative generation of income among banking locations, which have long been commonly considered important physical assets in producing customer referrals and program fee income.
About the Michael White-Symetra Bank Fee Income Report™
Michael White Associates, LLC (MWA) is a consulting firm headquartered in Radnor, PA, and online at www.BankInsurance.com. The Michael White-Symetra Bank Fee Income Report™ (Bank-FIR™) ranks th