Income from annuity sales at bank holding companies (BHCs) reached $640.9 million in the second quarter of 2010, up 10% from $582.6 million in the first quarter, according to the Michael White-ABIA (American Bankers Insurance Association) Bank Annuity Fee Income Report.
Year over year, bank annuity fee income was up 8.0% from the $593.1 million in the second quarter of 2009. First-half 2010 annuity commissions of $1.22 billion, however, were down 7.8% from $1.33 billion in the first half of 2009.
The report 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. Of those 930, 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 (i.e., the sum of annuity and insurance brokerage income) of $8.10 billion.
Of the 7,077 banks, 894 or 12.6% participated in first-half annuity sales activities. Those 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.
Nearly seventy-three percent (72.7%) of BHCs with over $10 billion in assets earned first-half annuity commissions of $1.15 billion, constituting 94.0% of total annuity commissions reported. This revenue represented a decrease of 8.4% from $1.26 billion in annuity fee income in first half 2009.
Among this asset class of largest BHCs in the first half, annuity commissions made up 10.3% of their total mutual fund and annuity income of $11.16 billion and 15.0% of their total insurance sales volume of $7.65 billion.
BHCs with assets between $1 billion and $10 billion recorded an increase of 4.9% in annuity fee income, rising from $59.6 million in first half 2009 to $62.5 million in first half 2010 and accounting for 37.4% of their mutual fund and annuity income of $167.1 million.
BHCs with $500 million to $1 billion in assets generated $11.0 million in annuity commissions in first half 2010, down 8.2% from $12.0 million in first half 2009. Only 32.3% of BHCs this size engaged in annuity sales activities, which was the lowest participation rate among all BHC asset classes. Among these BHCs, annuity commissions constituted the smallest proportion (12.9%) of total insurance sales volume of $84.9 million.
Wells Fargo & Company (CA), Morgan Stanley (NY) and JPMorgan Chase & Co. (NY) led all bank holding companies in annuity commission income in first half 2010. Among BHCs with assets between $1 billion and $10 billion, leaders included Stifel Financial Corp. (MO), Hancock Holding Company (MS), and National Penn Bancshares, Inc. (PA).
Among BHCs with assets between $500 million and $1 billion, leaders were First American International Corp. (NY), Ironhorse Financial Group, Inc. (OK), and First Citizens Bancshares, Inc. (TN).
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