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Banks' Insurance Income Flat In '07

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Insurance revenue among bank holding companies increased only slightly last year over 2006, a study of federal data shows.

BHCs recorded sales revenue of $43.7 billion in 2007, up just 0.5% from $43.5 billion in 2006, reports Michael White Associates, Radnor, Pa., which conducted the study for the American Bankers Insurance Association, Washington.

The top-ranked banks in insurance sales volume were Citigroup Inc., New York; Wells Fargo & Company, San Francisco; HSBC North America Holdings, New York, a unit of HSBC Holdings P.L.C., London; BB&T Corp., Winston-Salem, N.C.; and Bank of America Corp., Charlotte, N.C.

Michael White Associates based its findings on data reported to the Federal Reserve Board by BHCs.

Insurance continued to make important contributions to net operating revenues of many BHCs, notes Michael White, president of MWA. “Among the top 50 in insurance revenue, the mean ratio of insurance revenue to noninterest income was 13.4% in 2007.”

In 2007, 637 bank holding companies, about 68% of all top BHCs reporting, earned some insurance-related revenue, down from 642 in 2006. Of these, 632 banks had insurance brokerage operations.

Insurance brokerage fee income had been rising at a compound annual growth rate of 19.5% from 2001 through 2006, says Valerie Barton, executive director of ABIA, Washington. Much of the flattening in 2007 was due to softer property-casualty insurance sales, she reports.

New entrants to the top 50 for total insurance revenue in 2007 were Barclays Group U.S. Inc., a unit of Barclays Bank P.L.C., London; Central Community Corp., Temple, Texas; Utrecht-America Holdings Inc., New York, part of Rabobank International Holding B.V., Utrecht, Netherlands; Stifel Financial Corp., St. Louis; Santander Bancorp, San Juan, P.R., a subsidiary of Banco Santander, Madrid; Leesport Financial Corp., Reading, Pa.; Tompkins Financial Corp., Ithaca, N.Y.; First Bancorp, San Juan; and Valley National Bancorp, Wayne, N.J.

Of all banks, Utrecht-America increased its rank in total insurance income the most, leaping from 609th place at the end of 2006 to 33rd by year-end 2007, MWA reports. (At press time, the bank had not returned calls seeking more information.)

Total insurance revenue reported for the banks includes earnings from both sales and underwriting.


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