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MARCH
8
- 14, 2010
AIG SELLS AIA GROUP TO
PRUDENT PLC FOR $35.5 BILLION
New York City-based American International Group (AIG) has agreed to
sell AIA Group (AIA), its pan-Asian life insurance company, to
London-based Prudential plc for $35.5 billion, including $25.5 billion
in cash, $8.5 billion in face value equity and equity-linked securities
and $2 billion in Prudential preferred stock.
AIA will merge into Prudential to create the largest life insurer
in Asia when the deal closes at the end of 2010, pending shareholder and
regulatory approval. AIG
said it will use the proceeds from the sale to redeem $16 billion in
preferred interests in AIA held by the Federal Reserve Bank of New York
(FRBNY) and repay FBNY $9 billion under the FRBNY Credit Facility.
AIG plans to monetize $10.5 billion in Prudential face value
securities over time and use the cash generated to repay any outstanding
debt under the FRBNY Credit Facility.
AIG President and CEO Bob Benmosche said, “This transaction,
the most significant milestone to date in our ongoing effort to repay
taxpayers, gives us greater flexibility to move forward with AIG’s
restructuring and focus on enhancing the value of our key insurance
businesses, which will benefit all shareholders.”
U.S. HOUSE PASSES AGENT
LICENSING BILL
The U.S. House of Representatives passed H.R. 2554, the National
Association of Registered Agents and Brokers Reform Act of 2009 (NARAB
II) last week. The bill
establishes a National Association of Registered Agents and Brokers (NARAB)
as a nonprofit corporation that prescribes national insurance agent
licensing requirements and authorizes members of NARAB who meet these
requirements to sell insurance, adjust claims, and so forth in any state
for any lines of insurance specified in the producer’s home state
license. Under the bill,
states retain regulatory authority over licensing, supervision,
discipline, setting licensing fees, consumer protection and unfair trade
practices. Independent
Insurance Agents and Brokers of America (Big I) President and CEO Robert
Rusbuldt said, “H.R. 2554 would reform and improve the current system
of insurance regulation by providing one-stop, non-resident licensing
reciprocity.” The House
passed a similar bill last year, but the Senate has yet to act.
Both houses must pass the legislation and the President must sign
it into law before it takes effect.
ACAC COMPLETES GMAC PERSONAL
LINES ACQUISITION
Bethesda, Maryland-based American Capital Acquisition Corporation (ACAC)
has completed its acquisition of Winston-Salem, NC-based GMAC Insurance
Personal Lines. The
acquired company will do business as GMAC Insurance “for some time”
and continue to be headquartered in Winston-Salem under the new
leadership of Larry Pentis. GMAC
operates in 47 states and the District of Columbia offering personal
auto, RV, motorcycle, commercial auto and homeowners insurance.
GMAC Insurance Dealer Products and Services group and other
international personal lines insurance operations were not part of the
ACAC deal and continue as units of GMAC Financial Services.
NEW YORK LIFE INSURANCE
SALES REACH RECORD $1 BILLION PLUS IN 2009
New York City-based New York Life Insurance Company announced its life
insurance sales in 2009 jumped 14% to a record $1 billion plus.
New York Life said, “The economic downturn brought significant
financial consequences to families and businesses, we believe, resulting
in an increased focus on personal financial responsibility.”
He added, “What remained certain was that people still love
their families and still need to make financial decisions to ensure
their family’s security.”
NM GOVERNOR RICHARDSON TO
SIGN STATE’S HEALTH INSURER MANDATES
New Mexico Governor Bill Richardson is expected to sign into law
legislation approved by the state’s House and Senate that requires
health insurers to spend 85% of health insurance premiums on direct
medical services. Richardson
said House Bill 12 “will help control the rising costs of health
insurance,” BestWire reports.
NATIONAL FLOOD INSURANCE
PROGRAM ALIVE THROUGH MARCH
The National Flood Insurance Program, which expired on February 28, was
reactivated by the Senate on March 2 and given life until March 28.
Property Casualty Insurers Association of America President and
CEO David Sampson said, “The recent debate in Congress underscores the
need to bring greater certainty and stability to the flood program in
2010 and advance a long-term extension that ensures the program’s
fiscal soundness.”
MS AND SC INSURANCE
COMMISSIONERS RESIST CLIMATE RISK DISCLOSURE SURVEYS
Insurance Commissioners in Mississippi and South Carolina have joined
their counterpart in Indiana in declining to require insurance companies
domiciled in their states to complete climate risk disclosure surveys.
Mississippi Insurance Commissioner Mike Chaney said he did not
believe the survey collected useful data for insurance regulators,
concluding, “I just don’t see the reason for it.”
The National Association of Insurance Commissioners (NAIC) agreed
in March 2009 to require insurance companies with annual premiums of
$500 million or more to inform their state regulators of the financial
risks caused to their companies by climate change and the steps they are
taking to deal with those risks. In
January 2010, the NAIC’s Climate Change and Global Warming Task Force
adopted the survey framework to accomplish that requirement, BestWire
reports.
HOUSEHOLDS NEARING
RETIREMENT UNPREPARED FOR MEDICAL COSTS
A married couple, both of whom are aged 65 and free of chronic diseases,
can expect to spend $197,000 on health care costs over the rest of their
lives, according to a Prudential Financial-sponsored study conducted by
Boston College’s Center for Retirement Research.
That couple has a 5% risk that their healthcare costs will exceed
$570,000, including $71,000 and $79,000, annually and respectively, for
semi-private and private room nursing home care.
Unfortunately, less than 15% of households nearing retirement
have $570,000 in assets, the study found.
To
access the Center for Retirement Research study, click here.
RBS STILL REQUIRED TO SELL
INSURANCE UNIT
Edinburgh, Scotland-based Royal Bank of Scotland (RBS) reported a year
2009 net loss of £3.6 billion ($5.4 billion), an improvement over a net
loss of £24.3 billion ($36.6 billion) in 2008.
The company acknowledged, however, that “if RBS hadn’t
received government support, it wouldn’t be here today.”
That support mandates divestments, including the sale of RBS
Insurance, as part of the company’s settlement with the European
Commission. “The required
sale of our insurance business,” RBS said, is “intended to act as a
deterrent to companies seeking state aid.”
In 2009, RBS reported £58 million ($87.4 million) in operating
profit, down 90.1% from operating profit of £584 ($880 million) in
2008.
INSURANCE EARNINGS JUMP 32%
IN 2009 AT CITY HOLDING
Charleston, WV-based, $2.6 billion-asset City Holding Company reported
insurance commissions in fourth quarter 2009 climbed 13.1% to $1.11
million, up from $981,000 in fourth quarter 2008.
Bank-owned life insurance (BOLI) income rose 1.9% to $753,000, up
from $739,000, and trust and investment management fee income increased
6.0% to $549,000, up from $518,000.
Insurance, BOLI and trust/investment fee income comprised,
respectively, 8.6%, 5.8% and 4.2% of noninterest income, which surged
fourfold to $12.92 million, up from $3.18 million a year ago, when the
company recorded $10.8 million in investment securities losses.
Net interest income increased 6.1% to $22.01 million, up from
$20.74 million, as loan loss provisions dropped $3.77 million to $1.58
million, and net income soared 261% to $11.08 million, up from $4.25
million.
For the
year 2009, City Holding said, “Increased insurance revenues of $1.4
million, or 32% [to $5.58 million, up from $4.21 million in 2008],
associated with our wholly-owned insurance agency, City Insurance,
helped offset lower service fee income.”
BOLI income grew 11.6% to $3.27 million, up from $2.93 million,
and trust/investment management fee income rose 4.5% to $2.34 million,
up from $2.24 million. Insurance,
BOLI and trust/investment management fee income comprised, respectively,
10.7%, 6.3% and 4.5% of noninterest income, which surged 137% to $51.98
million, up from $21.94 million in 2008, when City recorded $38.27
million in investment securities losses.
Net interest income, however, slipped 3.2% to $88.38 million,
down from $91.33 million, helped by a $3.37 million decrease in loan
loss provisions to $7.05 million. Net
income, bolstered by soaring noninterest income, jumped 51.6% to $42.6
million, up from $28.1 million. City
Holding Company President and CEO Charles Hageboeck said, “While the
U.S. economy continued to struggle in 2009, I am quite pleased with
City’s results.” He added, “City remains one of the most profitable, most
liquid and best capitalized publicly traded banks in the U.S.”
In 2008,
City Holding’s insurance brokerage income comprised 7.1% of its
noninterest income and 2.6% of its net operating revenue.
The company ranked 41st in insurance brokerage
earnings among U.S. bank holding companies (BHCs) with assets between $1
billion and $10 billion, according to the Michael
White-Prudential Bank Insurance Fee Income Report.
DECLINING INSURANCE
REVENUE REMAINS LARGEST CONTRIBUTOR TO NONINTEREST INCOME AT COBIZ
Denver, CO-based, $2.5 billion-asset CoBiz Financial reported fourth
quarter 2009 insurance brokerage fee income dropped 28.1% to $2.58
million, down from $3.59 million in fourth quarter 2008, but remained
the largest contributor to noninterest income, comprising 39.8% of that
revenue, which decreased 8.1% to $6.49 million, down from $7.06 million.
Trust/investment management fee income slid 3.5% to $1.36
million, down from $1.41 million, to comprise 21.0% of noninterest
income. Net interest income
on a 4.36% net interest margin jumped almost fourfold to $8.44 million,
up from $2.19 million, as loan loss provisions decreased over $7 million
to $16.56 million and expenses decreased by $4.2 million.
But, the company, hit by $22.9 million in charge offs, reported a
net loss of $4.5 million compared to a net loss of $8.6 million in
fourth quarter 2008.
For the
year 2009, the company set aside $105.7 million in loan loss provisions
and recorded $73.5 million in net charge offs, impacting an $83 million
net loss compared to $1.3 million in net income in 2008.
CoBiz Chairman and CEO Steve Bangert said, “2009 was a tough
year and one I wasn’t sorry to see come to an end….
We exit 2009 with a stronger capital base, record liquidity and a
deeper management team.”
In 2008,
CoBiz Financial’s insurance brokerage income comprised 47.3% of its
noninterest income and 11.8% of its net operating revenue.
The company ranked 10th in insurance brokerage
earnings among U.S. bank holding companies (BHCs) with assets between $1
billion and $10 billion, according to the , according to the Michael
White Bank Investment Program Income Report.
BOLI JUMPS,
INSURANCE SLIDES AT FIRST DEFIANCE
Defiance, OH-based, $2.06 billion-asset First Defiance Financial Corp.
reported fourth quarter 2009 combined insurance and investment sales
commissions generated by First Insurance and Investments slipped 3.6% to
$1.08 million, down from $1.12 million in fourth quarter 2008, while
trust income rose 4.8% to $109,000, up from $104,000, and income from
bank-owned life insurance (BOLI) of $219,000 contrasted with a $428,000
loss the year before. Insurance/investment,
trust and BOLI earnings comprised, respectively, 19.4%, 2.0% and 3.9% of
noninterest income, which more than doubled to $5.58 million, up from
$2.76 million, helped by $2.07 million in mortgage banking income
compared to a $636,000 loss in that revenue in fourth quarter 2008.
Net interest income on a 3.82% net interest margin, however,
dropped 25.6% to $9.06 million, down from $12.17 million, as loan loss
provisions climbed by $4.65 million to $8.47 million.
Net income, bolstered by noninterest earnings including insurance
and investment fee income, jumped 81.8% to $1.6 million, up from
$880,000 in fourth quarter 2008.
For the
year 2009, combined insurance and investment sales commissions declined
8.7% to $5.02 million, down from $5.5 million in 2008; trust income fell
7.4% to $415,000, down from $448,000; but BOLI income jumped 72.4% to
$557,000, up from $323,000. Insurance
brokerage, trust and BOLI income comprised, respectively, 19.1%, 1.6%
and 2.1% of noninterest income, which grew 37.9% to $26.3 million, up
from $19.07 million, helped by an almost $7 million climb in mortgage
banking income. Net
interest income on a 3.76% net interest margin fell 11.1% to $44.09
million, down from $49.6 million, as loan loss provisions climbed by
over $10.6 million to $23.23 million.
Net income grew 12.2% to $8.3 million, up from $7.4 million,
driven by noninterest earnings, including insurance, trust and BOLI
revenue. First Defiance
Financial Chairman, President and CEO William small said, “We believe
that the fundamentals of the company remain sound, but it will take time
to work through the problem credits precipitated by the recession and
current real estate downturn.”
INSURANCE COMPRISES
29.3% OF 2009 NONINTERST INCOME AT OHIO’S PEOPLES BANCORP
Marietta, OH-based, $2 billion-asset Peoples Bancorp reported lower
property and casualty insurance commissions drove fourth quarter 2009
insurance brokerage fee income down 8.6% to $2.01 million, from $2.20
million in fourth quarter 2008, but insurance earnings remained the
second largest contributor to noninterest income behind $2.67 million in
service charges, comprising 25.8% of noninterest earnings, which slipped
0.5% to $7.78 million, down from $7.82 million in fourth quarter 2008.
Income from bank-owned life insurance (BOLI) decreased 3.9% to
$244,000, down from $254,000, to comprise 3.1% of noninterest income. But trust/investment management income rose 1.6% to $1.24
million, up from $1.22 million, to comprise 15.9% of noninterest
earnings. Net interest
income on a 3.50% net interest margin soared nearly sixfold to $8.66
million, up from $1.28 million, as loan loss provisions were almost cut
in half to $6.76 million. The
company reported net income of $0.7 million, compared to a net loss of
$3.1 million in fourth quarter 2008.
For the
year 2009, insurance brokerage fee income declined 5.2% to $9.39
million, down from $9.9 million, and, as the second largest contributor
to noninterest income behind service charges, comprised 29.3% of that
revenue, which slipped 0.2% to $32.05 million, down from $32.1 million.
Trust/investment management income fell 8.2% to $4.72 million,
down from $5.14 million to comprise 14.7% of noninterest income.
BOLI decreased 33.5% to $1.05 million, down from $1.58 million,
to comprise 3.3% of noninterest earnings.
Net interest income climbed 17.1% to $36.12 million, up from
$30.84 million, reflecting a $2 million decrease in loan loss provisions
to $25.7 million and a $7.5 million decrease in expenses.
Still, net income tumbled 69.0% to $2.31 million, down from $7.46
million in 2008. Peoples
Bancorp President and CEO Mark Bradley said, “The year 2009 was a
challenging year for our bottom-line earnings … caused by the economic
downturn that started in 2008.”
In 2008,
Peoples Bancorp’s insurance brokerage income comprised 30.1% of its
noninterest income and 10.8% of its net operating revenue.
The company ranked 18th in insurance brokerage
earnings among all U.S. bank holding companies (BHCs) with assets
between $1 billion and $10 billion, according to the Michael
White-Prudential Bank Insurance Fee Income Report.
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