Bank Annuity Income Rises 8.4% in First 9 Months Of 2014
January 23, 2015

Income earned from the sale of annuities at bank holding companies rose 8.4 percent to $2.71 billion in the first three quarters of 2014, compared with the first three quarters of 2013, according to the bank insurance consultancy Michael White Associates.

Third-quarter bank holding company annuity commissions rose 2.6 percent to $897.4 million from the year-ago period, the bank insurance consultant also reported.

Banks, which compete with independent insurance agencies, career agents and broker/dealers in the selling of annuities, have a built-in advantage over other sales channels. Banks have an opportunity to convert or roll over a certificate of deposit into an annuity every time a depositor comes into the bank to renew.

Annuities are attractive because they yield higher interest than CDs earn. Every time a bank sells an annuity, the bank generates income from the sale.

Income earned from bank-sold annuities reached a record $3.34 billion in 2013, an increase of 9 percent from 2012, Michael White Associates previously reported.

Of the 425 large top-tier bank holding companies reporting annuity fee income in the first nine months of last year, 214, (50.4 percent) were on track to earn at least $250,000 in 2014, the consultant added. Of the 214 banking institutions on track to earn at least $250,000 in 2014, 53.3 percent have achieved double-digit growth in annuity fee income.

“This increased double-digit growth in annuity revenues among large BHCs (bank holding companies) demonstrates the continued strength of the bank annuity sector,” White said in a news release.

Among the major banks reporting double-digit gains in annuity income for the first nine months are Citigroup, (30.6 percent), Citizens Financial Group (21.1 percent), SunTrust Banks (17.7 percent), Santander Bancorp (15.7 percent) and BBVA Compass Bancshare (14.6 percent).

Only JPMorgan Chase and Bank of America reported a drop in annuity income over the first nine months, Michael White Associates said.

The findings measure and benchmark the banking industry’s performance in generating annuity fee income.

The results are based on data from 6,589 commercial banks, savings banks and thrifts, and 1,060 large top-tier bank and savings and loan holding companies with assets of more than $500 million on Sept. 30, 2014.

Annuity sales through banks topped $35 billion in 2013, according to the Bank Insurance & Securities Association (BISA).