Loan demand may be weak at banks these days, but annuity sales are booming.
Through the first three quarters of 2011, bank holding companies racked up a record $2.26 billion in commissions from the sale of annuities, according to a report released Wednesday, a nearly 23% increase from the same period in 2010. Though annuity commissions in the third quarter of $731.5 million were down slightly from the record-setting second quarter, they were still up nearly 18% year over year.
The quarterly report was compiled by Michael White Associates of Radnor, Pa., and sponsored by the American Bankers Insurance Association.
The bulk of the commissions were generated by the largest bank holding companies. Seventy-five percent of the companies with more than $10 billion of assets offer annuities and that group accounted for 95% of all the annuity commissions tracked by Michael White Associates. The clear market leader Wells Fargo & Co., which reported annuity income of $617 million through the first nine months of 2011, a 19% from the same period in 2010. Morgan Stanley ranked second, with income of $318 million.
On a percentage basis, SunTrust Banks Inc. and BBVA Bancshares Inc. reported the most significant growth year over year. SunTrust's commissions increased by more than 56%, to $72.2 million, while BBVA's annuity income was up nearly 49%, to $54.8 million.
Among the top 10 annuity providers, BBVA also reported the highest percentage of annuity income to total fee income, at 8.99%. By contrast, annuity commissions accounted for just 2.2% of Wells Fargo's noninterest income.