Whatever Bank Holding Company Insurance Income Was In ’02, It Was A Lot
Bank holding companies tallied total insurance commission and fee income of $5.3 billion for 2002, according to a report from the American Bankers Insurance Association and the American Bankers Association, Washington, based on data submitted by BHCs to the Federal Reserve Bank.
However, some of the figures cited by the report conflicted with preliminary data found in another, as yet unpublished, study by Michael White Associates, Radnor, Pa., based on the same Fed data.
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The White study concluded that bank holding companies sold $5.71 billion in insurance the same year.
The two totals are not as close as they seem. Whites tabulations include figures from MetLife and Citigroup, two companies that ABIA excluded from its tabulations because the Fed data do not exclude nonbank sources of insurance sales for those two companies.
If insurance figures for both MetLife and Citigroup are added to the total, BHCs produced a total of $30.3 billion in insurance in 2002, ABIA reports.
E. Kenneth Reynolds, managing director of the ABIA, says he is unable to pinpoint exactly why the two organizations findings differ.
He notes, however, that the Fed only recently began releasing data on insurance sales of BHCs.
“Admittedly, this is a new reporting stream, so you never know if you may be missing something,” he says.
He also suggests that because some BHCs have several subsidiary holding companies, efforts to provide an accurate accounting of revenues can be complicated.
Whether this problem arose with ABIAs study or Whites, or both, was unclear.
A spot check of one bank suggests at least some of the disparity between the two studies may be based on misinterpretations of what constitutes revenue. Revenues would consist only of commissions and fees collected by the banks in selling insurance, not total premiums.
For instance, ABIA shows total income for Wells Fargo & Company, San Francisco, of $997 million. However, Wells Fargos own figures show combined insurance income of its two major insurance units of about $697.2 million.
Part of that $997 million included premiums, confirms Tom Murphy, senior vice president of Wells Fargo Insurances international insurance group.
This suggests ABIA researchers may have in some cases included figures for total premiums with actual revenues.
It was not apparent how extensive such inconsistencies may be. Spokesmen for two large bank holding institutions, Countrywide Financial Corp., Calabasas, Calif., and Bank One Corporation, Chicago, declined to comment on insurance data for their organizations. ABIA put Countrywide in second place on its list of top BHCs selling insurance, with $622.8 million in insurance revenue. White, on the other hand, ranks Countrywide 10th, with only $61 million in insurance revenue.
ABIAs Reynolds says his organization checked its data with leading BHCs, including Wells Fargo.
Differences aside, both White and ABIA data show BHCs are selling a considerable amount of insurance.
The data are not broken down by type of insurance and the figures do not include annuities sold by the BHCs securities brokerage units.