BOLI Assets Rise 4 Percent in 2014

By Cyril Tuohy InsuranceNewsNet

A survey of 3,803 banks reporting bank-owned life insurance (BOLI) assets has found those assets to be worth $149.6 billion last year. This is an increase of 4 percent compared with 2013.

BOLI policies are used by banking institutions to recover the costs associated with paying out employee benefits and to offset liabilities for retirement benefits owned to bank employees.

The survey, titled “Equias Alliance/Michael White BOLI Holdings Report,” also found that 58.4 percent of the nation’s 6,509 banks and savings institutions reported holding BOLI assets last year.

Conducted by the bank insurance consultancy Michael White Associates in Radnor, Pa., and the BOLI and benefit advisor Equias Alliance in Memphis, Tenn., the survey is helpful for insurance carriers and distributors looking to sell insurance into the banking sector.

Michael White, president of Michael White Associates, told InsuranceNewsNet, that the survey data shed light on the usage of life insurance among banks at a time when both BOLI ownership and the amount of BOLI assets are on the rise.

“In this case, we look at purchases and deposits and assets,” White said. “It also tells us within the industry whether or not particular types of (bank) charters are more involved in the particular ownership of BOLI.”

Banks with $1 billion to $10 billion in assets saw their BOLI assets rise by 10.8 percent to $18.78 billion, the survey found. Banks with $300 million to $500 million in assets saw their BOLI assets rise by 8.8 percent to $4.14 million.

Banks with less than $100 million in assets saw their BOLI assets drop 1.8 percent to $898.1 million. Banks with between $100 million and $300 million in assets also saw their BOLI assets drop 0.7 percent to $4.81 billion, the survey also found.

The survey found that the largest portion of BOLI assets was held in separate accounts.

Separate account cash surrender value assets totaled $71.2 billion, representing 47.6 percent of all BOLI assets in 2014. This was down from 49 percent of all BOLI assets in 2013.

White also said that separate account life insurance assets were most heavily concentrated among the largest banks, those with assets of more than $10 billion.

The predominant types of BOLI assets held by banks with less than $10 billion in assets were in general account life insurance assets and hybrid, or hybrid separate account life insurance assets.

The survey found that 94.3 percent or 3,587 of the 3,803 banks reporting BOLI assets in 2014 had $62.4 billion in general account life insurance assets.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].