Finance and Insurance Sector Industry Profile

The US finance and insurance sector consists of more than 230,000 companies with combined annual revenues of more than $3 trillion. Major firms include AIG, Bank of America, Citigroup, Fidelity, Goldman Sachs, JPMorgan Chase, MetLife, and Wells Fargo. Other major companies in the sector include credit card processing firm First Data Corporation, brokerage firm Charles Schwab, investment services firm Value Line, and REITs such as Simon Property Group. The sector is concentrated: the largest 50 companies account for nearly 50 percent of sales.

COMPETITIVE LANDSCAPE

Demand is driven by business activity, returns on investments, and consumer income. The profitability of individual companies depends on marketing, efficient operations, and investment expertise. Large companies often have advantages in access to cheaper capital, participation in large-scale transactions, and name recognition. Small companies can compete effectively through customer service, knowledge of the local market, and specialization. The industry is capital-intensive and highly automated: annual revenue per employee varies due to the number of industry groups but averages around $550,000.

The finance and insurance sector has undergone significant change in the past decade, and more changes are likely. The traditional lines between business segments within the finance and insurance sector were blurred by the Gramm-Leach-Bliley Act of 1999 (GLB Act), which permitted commercial banks to sell securities and insurance and enabled insurance firms to sell financial products. Deregulation led to the creation of gigantic financial services firms covering multiple ...