Because of effective cross-selling, TD Banknorth Inc.'s insurance brokerage fee income increased more than 30% last year.
That growth was one of the highlights of a quarterly report ranking the top 15 providers.
"We've been working very hard for the past two-plus years to increase the synergies between the bank and the insurance group at TD Banknorth," said Joe Fico, the president and chief executive officer of the Portland, Maine, company's insurance group.
However impressive the growth of TD Banknorth's insurance brokerage fee income was, its total of $56 million last year was a small fraction of the totals reported by the industry leaders, Citigroup Inc. and BB&T Corp., according to the Michael White-Symetra Bank Fee Income Report, released this month.
Last year insurance brokerage fee income rose 17% at Citi's banking unit, to $973 million, and 15% at BB&T's, to nearly $800 million. The next closest rival, Bank of America Corp.'s FIA Card Services, which is the former MBNA Corp., reported insurance brokerage fee income of $190 million.
Analysts and executives said some banks, including Bank of America, generated weaker insurance brokerage fee income last year than they did the year before because a soft environment for insurance sales where brokers could not generate the same premium levels they did in 2005.
Overall, banks boosted their insurance brokerage fee income by 3.7%, to a record $4.08 billion, according to the report.
The results at TD Banknorth, which is majority owned by Toronto-Dominion Bank, were a steppingstone in a plan to double its income organically within three years, Mr. Fico said. Earnings from the business more than doubled last year, to $14 million, he said.
The key to the success of business has been a carefully crafted system whereby the banking and insurance groups share prospects, Mr. Fico said. Each commercial lender at the bank is paired with a counterpart on the commercial insurance side. Cross-referrals are not mandated, but they are "strongly encouraged and there is an incentive plan," he said.
Likewise, each of the bank's 700 branches has a designated personal insurance salesperson.
Cross-referrals generated 50% of TD Banknorth's new insurance business last year, Mr. Fico said. "We've made a science out of selling insurance."
Wade Reece, the chairman and CEO of BB&T's insurance operations, said the Winston-Salem, N.C., company has become an insurance powerhouse as a result of years of aggressively acquiring brokerages.
However, last year's success was driven from inside the organization, he said.
In what Mr. Reece called the insurance unit's "best new business year ever," organic growth came in at 9.9%, and client retention improved 3.5%.
"For the last several years we have placed tremendous emphasis with the staff on trying to get retention rates up," he said.
Both TD Banknorth and BB&T accomplished their growth in what insurance executives call a "soft market" for certain types of insurance, meaning lower demand has been holding prices down.
BB&T credits its resiliency to its broad range of products that encompasses everything from property/casualty lines to insurance for transportation, energy, and marine businesses.
"If you looked at us seven years ago, we are now a more sophisticated, diverse-client company, and that has really helped us," Mr. Reece said.
Michael White Associates LLC, a Radnor, Pa., consulting firm for banks and insurers, complied the report. According to the firm's head, Michael White, insurance brokerage fee income rose 3.7% industrywide, which is less than the compound annual growth rate of 6.5% since 2001.
Though Citi had higher insurance brokerage fee income last year than BB&T, insurance is more important to BB&T in terms of noninterest income, Mr. White said. Insurance income accounted for 35% of BB&T's noninterest income, compared with 6% of Citi's.
Rod Halvorson, senior vice president of financial institutions distribution for Symetra Life Insurance Co., the report's sponsor, said the slow growth was in part a result of slowing bank platform sales of fixed annuities.
The report, culled from Federal Deposit Insurance Corp. data, includes the sale of credit, life, health, property, casualty and title insurance, along with annuities not sold by securities brokerage firms.
