Banks Report Record Annuity Sales

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Annuity sales generated record revenue for banks last year.

In 2013, annuities produced $3.43 billion, up 9% from 2012, according to the Michael White Bank Annuity Fee Income Report.

The largest bank holding companies—those with more than $10 billion in assets—accounted for the bulk of the revenue, raking in $3.20 billion in annuity commissions, or 93.1% of the industry total. Banks with between $1 billion and $10 billion in assets generated $207.1 million, while those with between $500 million and $1 billion generated $31.7 million.

“There were signs of a definite improvement in bank holding company annuity earnings momentum,” Michael White, president of consulting firm Michael White Associates, said in a statement. In addition to record generation of annuity revenues in 2013, the number of banks with both meaningful annuity income and double-digit growth increased significantly, White noted.

According to the report, a total of 423 banks reported annuity fee income in 2013. Of the 216 that earned at least $250,000 from annuities, 127, or 58.8%, saw double-digit growth in annuity fee income, a 24-point rise from 2012, when only 34.6% grew by 10% or more.

Nearly 100 banks had at least $1 million in annuity revenue in 2013, and 69 of them managed to grow their revenue, double the number of banks that were able to do so in 2012.

“The numbers of significant players exhibiting growing programs, the rates of growth among them, and the substantial increase in significant players that experienced growth is a testimony to the caliber and resiliency of those annuity programs,” White said.

Wells Fargo was the top producer of annuity fee income in 2013, generating $837 million, followed by Morgan Stanley with $663 million, and Raymond James Financial with $321.4 million.

The report is based on data from all 6,812 commercial banks, savings banks and savings associations, and 1,062 large top-tier bank and thrift holding companies with consolidated assets greater than $500 million operating on Dec. 31, 2013.

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