Bank-Owned Life Insurance Assets Reached $145B In 1Q 2012

Bank-owned life insurance (BOLI) assets reached $145.6 billion in the first quarter of 2012, an 8.7 percent year-over-year increase from the reported BOLI assets of $133.9 billion for the same period in 2011, according to the Michael White/Meyer-Chatfield Bank-Owned Life Insurance Holdings Report.

BOLI assets can be divided into three types: separate account life insurance (SALI) assets, general account life insurance (GALI) assets and hybrid account life insurance (HALI) assets. 

SALI assets were most heavily concentrated (92.5 percent) among the largest banks with assets greater than $10 billion, according to the report. While still predominantly held by big banks, GALI and HALI assets were less concentrated: Smaller banks held 36.7 percent of GALI assets and 29.8 percent of HALI assets in the first quarter of 2012, as opposed to the much lower 7.5 percent of SALI assets. 

The fastest growing type of BOLI assets in the first quarter of 2012, in terms of the increase in the number of banks employing them, were hybrid assets. From first quarter 2011, the number of banks using hybrid accounts increased 37.3 percent. 

The report stated that banks employing separate account or SALI assets increased slightly by 3.8 percent in the first quarter of 2012, up from 582 in first quarter 2011.

However, the report noted that approximately one-third of the overall increase ($3.78 billion) in BOLI assets was due to the new reporting of thrift holding companies. The Federal Reserve is allowing, through 2013, a two-year phase-in of new reporting requirements by a limited number of thrift holding companies, also known as savings and loan holding companies.

Eighty-one percent of bank and thrift holding companies and 34.5 percent of stand-alone banks reported BOLI holdings, up 8.6 percent and 13.2 percent, respectively, from reporting figures a year ago.

BOLI assets include those held by large bank and savings and loan (or thrift) holding companies (BHCs and THCs, collective, holding companies or HCs) and stand-alone banks. 

According to the report, BOLI assets are used to recover costs of employee benefits and offset the liabilities of retirement benefits, helping banks to keep up with the rising benefit costs. 

The data used for the report was reportedly submitted to regulators by 1,074 large top-tier holding companies with assets greater than $500 million and all 7,307 commercial banks, savings banks and savings associations operating on March 31, 2012. Several THCs that are historically and traditionally insurance underwriting operations have been excluded from the report.