Revenue from insurance brokerage continues to slide at bank holding companies.
According to the recently released Michael White Succeed Advisors Bank Insurance Fee Income Report, bank holding companies generated $3.07 billion in insurance brokerage fee income in the first half of 2014, down 8.9% from the same period a year ago. That follows a year-over-year decline in the first quarter of 8.4%.
Bank of America, Citigroup and Wells Fargo accounted for most of the first-half-year slide. Bank of America's insurance brokerage income plunged $228 million, or 91.6%, to $21 million, while Citigroups and Wells Fargos fell by $59 million and $56 million, respectively.
Regulatory issues in the U.K. have plagued insurance revenue at Bank of America, as well as other banks, Michael White, president of Michael White Associates, a research and consulting firm based in Radnor, Pa., explained. The problem stems from concerns about the way some companies have handled complaints relating to the sale of payment protection insurance policies.
Bank of America and many other banks were forced to take losses in income due to refunding of premiums, regulatory penalties and other charges enforced by the U.K. regulator, White said.
Despite the huge drops posted by the three behemoths, the largest bank holding companies as a groupthose with more than $10 billion in assetsstill produced the bulk of the insurance revenue industrywide, generating $2.58 billion, or 84% of the total.
According to the report, nearly three in four bank holding companies (72%) registered increases in insurance brokerage revenue from the previous year. That's up from the first half of 2013, when only 66% of the banks posted gains. In addition, the number of bank holding companies with double-digit increases rose 19.8% to 127 from 106 in 2013.
"These findings signal more concentrated and significant revenue generation among a slightly smaller number of bank holding companies," White said in the report.
BB&T Corp., which owns more agencies than any other financial holding company, was the biggest producer of insurance brokerage income in the first half of 2014, bringing in $784.8 million. Wells Fargo ranked second nationally with $760 million followed by Citigroup with $317 million.
The report was based on data from all 6,656 commercial banks, savings banks and savings associations and 1,063 large top-tier bank holding companies and thrift holding companies operating on June 30, 2014. It was sponsored by Succeed Financial Advisors, an M&A advisory firm specializing in the insurance industry.