Prices for property/casualty insurance have been weak for more than three years, but that has not stopped BancorpSouth Inc.'s insurance business from thriving.

The Tupelo, Miss., company's insurance brokerage fee income jumped 23% in the second quarter from a year earlier, according to the Michael White-Symetra Bank Fee Income Report.

James Threadgill, vice chairman of BancorpSouth, said acquisitions had a lot to do with that improvement. "We've been fortunate to acquire some very, very good agencies with great expertise, strong sales staffs, and a focus on growing new business in the soft market," he said. But a heavier emphasis on selling existing clients more insurance products has also helped, Mr. Threadgill said. "As rates have come down, we are trying to advise our clients to add coverages that they might want to consider."

BancorpSouth's efforts suggest how bank-owned insurance agencies, which have struggled through a cycle of low commissions for the past three years, may be starting to turn the tide. Bank holding companies' revenue growth, which was a healthy 17% in 2005, fell to 10% in 2006 and 1% in 2007, according to the White-Symetra report. But banks reported insurance fee income of $3.18 billion from the fourth quarter of 2007 through the second quarter of 2008, a 6.7% increase from the $2.98 billion they posted for the fourth quarter of 2006 through mid-2007, the report said. Each quarter's income exceeded $1 billion, the first time that has happened for three consecutive quarters, Michael White said. He said factors behind the 6.7% jump include acquisitions, better management, and a focus on cross-selling.

"I think everybody is running hard to maintain their revenues in the soft market," he said. "For some, maybe the soft market is the ultimate motivation to get their act together and try some new things."

Mr. White put organic revenue growth at 3.5% to 4.5% this year, about half of what he would consider a strong rate. He said bank insurance executives have told him that the tough environment has made them focus more on things like sales management. Some banks are demanding more detailed accounts of how their insurance sales employees are spending their time, he said.

There is little question, however, that agency acquisitions are playing a part in many banks' success. BancorpSouth Insurance Services Inc. early this year bought JMG/IC Insurance Agency Inc. of Nacogdoches, Tex., and in late 2007 it nabbed Risk Management Services Inc., the property/casualty business of Arthur J. Gallagher & Co.

Yet the pace of such deals has been slowing, with independent agencies reluctant to sell because the soft market has lowered their value. At the same time, banks looking to preserve capital will be less likely to acquire the rest of this year and next year, said Carmen Effron, who heads C F Effron Co. LLC, a consulting firm in Weston, Conn.

An example is Huntington Bancshares Inc. of Columbus, Ohio. Pete Dunlap, president of Huntington Insurance, said it is planning a major expansion of its insurance operations into Michigan, Kentucky, and West Virginia without the benefit of acquisitions. Huntington's insurance revenues ballooned more than 500% last year, to $37.7 million, thanks to the acquisition of Sky Financial Group of Bowling Green, Ohio, which had a substantial insurance business.

Ms. Effron expects fewer deals through next year. But earnings pressure on banks will likely keep them focused on generating insurance revenue, she said, and that could mean adding products. "There is a host of products that are not being pushed to their potential," she said, giving debt-cancellation insurance and fully underwritten life insurance as examples. Even if full-blown agency acquisitions are not in the cards, banks may consider "liftouts" to buy a product line from an agency, she said.

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Corrected October 28, 2008 at 6:50PM: In the Oct. 8 paper, a story on page 7, "Bank-Owned Insurance Shops Showing Signs of a Turnaround," misdescribed a purchase by BancorpSouth Insurance Services. Late last year it bought the property/casualty business lines of the Springfield, Mo., office of Arthur J. Gallagher Risk Management Services Inc.