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BOLI Assets Reach Almost $104 Billion in 2006

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Banks and bank holding companies reported bank-owned life insurance assets of $103.9 billion in 2006, up almost 49% from $69.9 billion a year earlier, according to a new report.

The significant increase in reported BOLI assets in 2006 was due largely to a reporting requirement change, notes Michael White Associates LLC, Radnor, Pa., which compiled the report. Previously, Federal reporting requirements mandated that BOLI assets be reported only when they reached a 25% of “other assets” on banks’ balance sheets. As of 2006, the requirement is that all banks and BHCs with assets greater than $500 million report all their BOLI assets.

The White report covers data from 854 BHCs with consolidated assets of at least $500 million and over 7,800 commercial banks and FDIC savings banks.

As with corporate-owned life insurance policies, banks use BOLI to offset the cost of employee benefits such as health insurance benefits and retirement benefits.

Among the study’s most significant findings are these:

Large BHCs increased their 2006 BOLI holdings by 56.4%, from $64.6 billion in 2005 to $101 billion in 2006.

Stand-alone banks–i.e., those without bank holding companies–recorded an added $2.5 billion in BOLI. Another 70 BHCs with assets between $300 million and $500 million reported $400.2 million in BOLI assets.

Of large BHCs, more than 80% reported holding BOLI assets in 2006.