M&A activity for the U.S. banks in the insurance brokerage industry has so far been slow in 2022, compared to the last year or even the past seven years, although banks were generally still more interested in boosting than shrinking their insurance verticals.

So far this year, U.S. banks have recorded 12 insurance broker acquisitions, either directly or indirectly through their subsidiaries. This is down from 23 acquisitions in 2021 and half the number of acquisitions recorded in 2016 and 2018, according to S&P Global Market Intelligence data.

Four sales of insurance brokerage businesses by banks have so far been recorded in 2022, compared to seven in 2021 and 12 in 2016 and 2018.

Still bullish

Boston-based Eastern Bankshares Inc. has been the most active in this domain with 11 acquisitions of insurance brokers and related assets since 2016.

Eastern Bank subsidiary Eastern Insurance Group LLC has made 36 insurance agency acquisitions since 2002, with Newtonville, Mass.-based Burns Insurance Agency Inc. in August being the latest. Eastern Insurance so far has made two acquisitions in 2022, the purchase of Michals Insurance Agency Inc. in March being the other one.

Insurance commissions contributed 15% of Eastern Bankshares' first-half revenue of $354.2 million, according to the holding company's investor presentation in July. Eastern Bankshares garnered $24.7 million in insurance commissions in the second quarter, accounting for 64.35% of the company's total noninterest income.

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Banking giant Truist Financial Corp. is nearly as bullish as Eastern Bankshares on its insurance vertical. Truist bought 11 insurance brokers over the past seven years, while it sold one insurance underwriter, WBAIS Inc., to Bermuda-based reinsurer Sompo International Holdings Ltd. in December 2020.

Despite the single sale, Truist around that time estimated that its insurance vertical would in the long run account for about 14% to 15% of its total revenue, given that BB&T's insurance business — before its merger with SunTrust in 2019 to form Truist — had aimed to represent 17% to 20% of revenue. Then Truist Chairman and CEO Kelly King said at the time that Truist would be expanding its insurance business through bolt-on acquisitions of smaller companies as a way to diversify Truist's operations.

In the third quarter, Truist's insurance broker subsidiary CRC Insurance Services Inc. purchased BenefitMall, or Centerstone Insurance and Financial Services Inc., from venture capitalist Carlyle Group Inc.

Exits

On the other hand, Wells Fargo & Co. and First Community Bankshares Inc. chose to exit from the insurance brokerage business. From 2016 to date, Wells Fargo sold five insurance brokerage units, while First Community Bankshares off-loaded two.

The insurance vertical accounted for $70 million, or 1.05%, of Wells Fargo's noninterest income in the second quarter, while it contributed nothing to First Community Bankshares' second-quarter noninterest income.