some business lines – such as mortgages and credit cards – banks in
Europe are putting more of their focus on insurance as a revenue
driver. According to research by RBI, looking at 10 of the
biggest financial services groups in Europe, the contribution
insurance made to group revenue grew on average 20 percent between
H108 and H107.
The steepest rises in contribution occurred in UK-based groups,
with Barclays topping the list. Barclays has put ever-greater focus
on mass market insurance over the past two years – on 2 September,
for instance, it announced its latest venture, a low-cost life
insurance distribution deal with UK insurance group Norwich Union.
It sold Barclays Life, its closed life assurance business, to Swiss
Re last month for £735 million ($1.3 billion).
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Evidence of wider interest in insurance across the continent is
strong. Crédit Agricole, France’s largest banking group, reported
in its interim figures that fee income from insurance was the
fastest growing source of fees at its French retail banking unit,
up 9 percent year-on-year. Royal Bank of Scotland said its RBS
Insurance unit “made good progress” in the first half of 2008, with
contribution growing to £513 million, an increase of 41 percent.
And total revenues in the first half of 2008 from the global
business of Santander Insurance were €1.12 billion ($1.58 billion),
up 22.3 percent.
HSBC said insurance contributed $1.6 billion, 16 percent of
group profit before tax, up 4 percent on H107, with a particularly
strong performance in bancassurance: net earned premiums up 30
percent to $5.2 billion (Europe up 54 percent, Asia up 15 percent,
Latin America up 23 percent, and North America insurance fee income
up 34 percent).
HSBC said it was now the ‘preferred strategic partner’ in
bancassurance in 23 countries with 82 product launches or
migrations agreed in the first half of 2008.
Unhappy bedfellows?
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By GlobalDataThe figures, however, come in the wake of the failed tie-up
between Allianz and Dresdner in Germany (see: All change in
Germany and The worst of the worst M&A deals?)
and the fact insurance and banking have not always made happy
bedfellows. Getting the two lines to work harmoniously together has
proved surprisingly difficult.
A significant number of Spain’s banks have been selling their
insurance subsidiaries with more focus on distribution income than
underwriting (see RBI 596), part of a wider, general trend
in European banking towards fee income.
In contrast to the banks, one of Europe’s largest insurers, ING,
is putting more of its weight on banking: insurance continues to
contribute less than half of group revenue. CEO Michel Tilmant said
his group’s first half earnings were driven by “a large increase in
lending… In Retail Banking and ING Direct, we continued to grow
savings despite strong competition for deposits.”
