BOLI Assets Increase Nearly 16% in 2007

May 13, 2008 ( - Large bank holding companies (BHCs) and stand-alone banks reported bank-owned life insurance (BOLI) assets of $120.4 billion in 2007, reflecting a 15.9% increase from $103.9 billion in 2006, according to the 2008 edition of the Michael White-MullinTBG BOLI Holdings Report.

According to a press release on the data, large top-tier BHCs increased their 2007 BOLI holdings by 16.4% from $101 billion in 2006 to $117.5 billion in 2007. Stand-alone banks, those without BHCs, recorded an added $2.5 billion in BOLI holdings. BOLI is used to recover the costs of supplemental employee health and retirement benefit plans.

Other report findings, according to the press release, included:

  • Another 56 BHCs with assets between $300 million and $500 million reported $340.8 million in BOLI assets.
  • Of the 857 large top-tier BHCs (assets greater than $500 million), 696 or 81.2% reported holding BOLI assets in 2007, representing a 1.3% increase from 687 in 2006.
  • BHCs with assets between $1 billion and $10 billion reported the highest incidence of BOLI ownership, as 315 of 375 BHCs, or 84.0%, reported having BOLI assets.
  • The largest BHCs, those over $10 billion in assets, accounted for the largest dollar and percentage increase – $16 billion or 18.1% – in their combined BOLI assets.
  • BHCs with assets between $500 million to $1 billion registered the second largest percentage increase in total BOLI assets, rising 4.5% from $2.86 billion in 2006 to $3.03 billion in 2007.
  • The largest by-category increase in BHCs reporting BOLI assets occurred among BHCs with $1 billion to $10 billion in assets.  Their number increased by nine from 306 BHCs in 2006 to 315 in 2007.
  • The largest BHCs, those over $10 billion in assets, recorded the highest mean BOLI assets as a percent (16.6%) of total capital in 2007.
  • Nationally, mean BOLI assets as a percent of total capital increased from 13.3% in 2006 to 13.7% in 2007.

The announcement noted that the Federal Reserve recommends it is generally not prudent for a BHC to hold BOLI assets with an aggregate cash surrender value (CSV) that exceeds 25% of the sum of the institution’s Tier 1 capital and the allowance for loan and lease losses.

The data was reported by 857 large BHCs and over 7,700 commercial banks and FDIC-supervised savings banks operating on December 31, 2007.

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