Banks’ annuity fee income rose 10% in the second quarter, but that income is nevertheless down 7.8% for the first half of the year because first-quarter annuity sales were so weak, according to a report released Thursday.
Income earned, or commissions, from the sale of annuities at bank holding companies rose to $640.9 million, up 10.0% from $582.6 million in first-quarter 2010, according to the Michael White-American Bankers Insurance Association bank annuity fee income report.
This year’s second-quarter commissions were 8.0% higher than the $593.1 million earned in the second quarter of 2009. However, first-half 2010 annuity commissions of $1.22 billion were down 7.8% from the $1.33 billion in fee income earned in first-half 2009.
“Bank annuity revenues were really bad in the first quarter of this year. They were way down, and that is holding back first-half results. The big picture story is that there is some decent improvement in the sales of annuities, but there’s still a ways to go,” said Michael White, president of bank insurance consulting firm Michael White Associates, headquartered in Radnor, Pa., in a phone interview.
Of 930 bank holding companies (BHCs), 387, or 41.6%, participated in annuity sales activities during first-half 2010. Their $1.22 billion in annuity commissions and fees constituted 10.8% of their total mutual fund and annuity income of $11.33 billion and 15.1% of total BHC insurance sales volume of $8.10 billion. The volume equals the sum of annuity and insurance brokerage income.
Of 7,077 banks, 894, or 12.6% participated in first-half annuity sales activities. Participating banks earned $375.0 million in annuity commissions, or 30.6% of the banking industry’s total annuity fee income. However, bank annuity production was down 22.6% from $484.3 million in first-half 2009.
Wells Fargo & Company, Morgan Stanley, and JPMorgan Chase & Co. led all bank holding companies in annuity commission income in first-half 2010.
Compiled by Michael White Associates and sponsored by American Bankers Insurance Association, a separately chartered insurance affiliate of the American Bankers Association, the bank annuity fee income report measures and benchmarks the banking industry’s performance in generating annuity fee income. It is based on data from all 7,077 commercial and FDIC-supervised banks and 930 large top-tier bank holding companies operating on June 30, 2010.
Read “Annuities: A Better Answer than Social Security” by Victor Connor, president of Connor Financial Group, from the archives of AdvisorOne.com.