Despite lingering doubts about insurance companies' efforts to operate retail banks, a growing number of insurer-owned banks have been gaining profitability and scale.

Only four of the 33 insurer-owned banks in operation for at least five years in the U.S. failed to show a profit last year, according to data compiled for The Wall Street Journal by SNL Financial of Charlottesville, Va. In 2004, the number stood at 10. Five years ago, 14 of those insurer-owned banks didn't turn a profit.

The reason: the increasing popularity of Internet banking, high-yield savings accounts and the blurring of the boundaries between the financial offerings available at bank branches and at the offices of other financial-services providers such as insurance companies.

MetLife Bank is a prime example of the recent change. The MetLife Inc. subsidiary, based in Bridgewater, N.J., increased its net income by 71 percent to $8.5 million in 2005, its second profitable year in a row. By comparison, the bank posted a $15 million net loss following its first year of operation five years ago. While those profits and losses are a small fraction of the massive balance sheets of large insurers like MetLife, the trend shows insurer-owned banks are headed in the right direction.

Nationally chartered MetLife Bank held more than $7 billion in assets and $4.7 billion in deposits as of June 30, ranking it third among all U.S.-based insurer-owned banks.

This turn to profitability and the rapid deposit growth that has accompanied it suggest that a few big insurers may be on the way to discovering the recipe for how to be better bankers than bankers were insurance underwriters.

Traditional banks have largely left or ignored the underwriting market since 1999 when Congress removed the barriers between the banking, insurance and securities businesses with the passage of the Graham-Leach-Bliley Act. But it turns out that the synergies and profits that bank executives believed existed -- and challenged the insurance companies over -- simply didn't.

At the same time, an explosion of Internet-based banking coupled with consumers' thirst for high-yield savings accounts and products in the past couple years clearly have benefited insurer-owned banks in building their fledgling operations. Like MetLife Bank, almost all insurer-owned banks operate fewer than three bank branches and have focused largely on attracting customers with high-yielding savings accounts and products through the Internet and the offices of insurance agents.

As a result, out of the roughly 8,500 banks in the U.S., five of the 20 fastest-growing deposit-gathering banks on a percentage basis from 2000 through 2005 were owned by insurance companies, according to data compiled by SNL Financial. That group includes banks operated by large publicly traded insurers MetLife, Allstate Corp. and American International Group Inc. As of June 30, five U.S.-based insurance companies owned banks with more than $1 billion in deposits, compared with two in 2001, according to the Federal Deposit Insurance Corp.

A recent analysis by financial consulting firm Mercer Oliver Wyman shows that while insurer-owned banks rapidly have gained deposits, 23 of the nation's top 30 banks lost deposit market share from 2000 to 2005.

"Smaller depository institutions are taking share from the larger ones," says Michael Poulos, a consultant who heads the retail banking group at Mercer Oliver.

Among the reasons Mr. Poulos cites for this shift are poor execution by bigger banks, demographic changes and traditional banks being priced out of the high-yield savings-account and certificate-of-deposit market by up-and-comers like MetLife Bank and State Farm Bank.

To their credit, both insurer-owned banks have noticed the recently rising interest-rate environment and increased competition in the market for high-yield savings accounts and begun to change their strategies from deposit-gathering to deepening bonds with the thousands of new banking customers they have gathered in recent years.

Within the past year, MetLife Bank quietly has deployed bankers, rather than insurance agents, in MetLife's insurance offices in 12 U.S. markets. This is similar to a test-strategy deployed earlier this year by Citigroup Inc., which put bankers in some of its CitiFinancial consumer-finance offices to better serve existing customers and gain accounts. One thing bankers and insurers know: The more financial products a customer buys from a company, the more likely he will stay a customer.

"For MetLife, we entered the banking business for very different reasons," said Donnalee A. DeMaio, president of MetLife Bank. "It isn't meant to fund MetLife. It's about looking to the future and providing complete solutions to our customers."

Still, despite their gains, traditional bankers aren't worrying about what insurers might accomplish next in banking.

"It terms of what banks are thinking about right now, (insurer-owned banks) are below the radar," Mr. Poulos of Mercer Oliver says. "Banks will start caring when they start cutting into the most profitable deposits."