Banks' income from insurance brokerage fees topped $3B in 3Q

Insurance brokerage fee income at banks hit $3.05 billion for the third quarter of 2009, up 11.7% from the year-ago period, according to the Michael White-Prudential Bank Insurance Fee Income Report. That’s the highest level in the last five quarters, according to the data compiled by Michael White Associates LLC. Bank-holding-company insurance brokerage fee income includes commissions and other fees a bank-holding company or its subsidiaries earn from insurance product sales, as well as referrals for credit, life, health, property-casualty and title insurance. Through the first three quarters of 2009, insurance brokerage fee income at bank holding companies totaled $9.1 billion, down 0.7% from the year-ago period. The study, based on data from 7,319 commercial and FDIC-supervised savings banks and 922 top-tier bank holding companies, was sponsored by The Prudential Insurance Co. of America’s individual life insurance business. Wells Fargo & Co. led the pack with $1.38 billion in year-to-date insurance brokerage fee income through the third quarter, up 5.34% from the first nine months of 2008. Citigroup Inc. came in second, with insurance brokerage fee income of $771 million for the first three quarters of last year, down 19.27% from the year-ago period. BB&T Corp. rounded out the top three, reporting $699.9 million in insurance brokerage fee income for the first three quarters in 2009, reflecting an 11.8% gain from the year-ago period. Improving fee income might have something to do with a softening market for property-casualty insurance, noted Michael White, president of Michael White Associates. Further, while some bank holding companies have exited the insurance business or changed to a savings-and-loan charter — which would remove them from the pool of banks in this study — there have been a few new entrants, which has helped offset the decline, Mr. White added. “While some bank holding companies have disappeared and exited from insurance, we have some new entrants with relatively substantial insurance operations,” he said.