Bank Insurance Brokerage
Fees Reach Record High
BY MARK E. RUQUET
INSURANCE-BROKERAGE fees for bank- holding companies were up more than 14 percent over the first three quarters of
2011, but the two major bank-owned P&C
brokers saw their fees drop over the period.
The Michael White-Prudential Bank
Fee Income Report, released Feb. 7, says
insurance-brokerage fees came in at a
record $5.89 billion over the first three
quarters of 2011, an increase from the
previous year’s $5.14 billion.
For just the third quarter, fees rose 57
percent over the same period in 2010, or
$730 million, to $2.01 billion.
The results were the highest-ever third-quarter results, the report says, and rank
as the third-highest quarterly amount in
insurance-brokerage-revenue history.
Through the first three quarters of 2011,
Wells Fargo & Co. ranked second on the list
with brokerage-fee revenue of $1.26 billion,
which is down close to 6 percent from 2010.
BB&T, ranked third, saw its insurance-fee income drop less than 1 percent to
$707 million.
Number one on the list is CitiGroup,
which engages primarily in life and
financial-services brokering. CitiGroup
reported its brokerage-fee income rose 25
percent to $1.66 billion.
The results were compiled from data from
all 6,740 commercial and FDIC-supervised
banks and 927 top-tier bank-holding
companies operating on Sept. 30, 2011.
Michael White, president of Michael
White Associates, says overall, bank-
holding companies grew their revenues
“in a meaningful way.”
White says that an examination showed
that of 155 banks with at least $1 million
in annualized insurance-brokerage income,
four had no growth during the first three
quarters of last year. Eighty banks had
positive brokerage-fee growth, and 71 had
declines.
“These changes signal improvement
among bank-holding-company agencies
and offer hope that the economy is finally
beginning to improve a bit—and the P&C
insurance markets are starting to harden,”
he adds. NU
Allstate
Compensation
Glitch Adds to
Agent Displeasure
Reagan: Organic Growth, Profitability
Increased for Privately Held Brokers in 2011
BY STAFF WRITER
IN SPITE of continuing soft-market condi- tions, both median organic growth and earnings before interest, taxes, deprecia-
tion and amortization (EBITDA) for privately
held insurance agents and brokers were up
slightly from 2010. Median organic growth
totaled 3. 7 percent, and median EBITDA prof-
itability was up slightly at 18.2 percent, ac-
cording to Reagan Consulting’s 2011 year-end
Organic Growth and Profitability (OGP)
Survey, released Feb. 13.
BY MARK E. RUQUET
IF THERE WASN’T already enough tension between Allstate agents and the company, a memo about a glitch in agents’ compensa-
tion may have added some more fuel to the fire.
On Feb. 10, agents were informed through
an internal communication that there were
problems with calculating their annual bonuses and incorrect information was reported on
some agency owners’ tax forms.
The company says in a statement that it is
re-running the report “with additional checks
and balances to ensure accuracy.”
The company anticipates agents will have
their bonus payments delayed until Feb. 23,
but under contract, Allstate has until March 15
to make the payments.
Perhaps more annoying for an agent who
has filed his or her taxes, information on Form
1099-MISC reported incorrect income information related to two incentive programs for
some agency owners and processed income
information to the wrong agent-identification
numbers for other agency owners.
Allstate says it will issue corrected forms
and pay for any amended returns upon the
agent’s request. “We regret any confusion,
inconvenience or anxiety these recent process
errors may have caused amongst some of our
agency owners,” the company says.
The issue affects 4,700 agency owners, out
of a total of 11,500.
While expressing reluctance to exacerbate
what is in some quarters an already contentious relationship between agents and the
company, Jim Fish, executive director of the
National Association of Professional Allstate
Agents, says the association does plan to ask
whether any agency-owner terminations took
place based on inaccurate information aggregated by Allstate’s systems.
A spokeswoman for Allstate says overall,
its information is correct and that the errors
related only to the bonus payments. She adds
that the termination of any agent is a very long
and involved process and would not be based
solely upon the aggregated data. NU
