Banks Bought Fewer Agencies In 2003, But Paid More

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Banks bought fewer insurance agencies in 2003 but paid more on average, according to Alexander Sedgwick, mergers and acquisitions manager for the research firm, SNL Securities, in Charlottesville, Va.

There have been 56 acquisitions of agencies by banks thus far in 2003, compared to 74 last year. Banks were involved in 33% of agency acquisitions in 2003, Sedgwick says, vs. 38% last year, a difference he does not consider significant.

“The intriguing part [of bank agency acquisitions] is that deal values increased to $425 million, compared to only $133 million last year,” says Sedgwick.

Since most deal values are not publicly disclosed, those numbers represent only a fraction of the total dollar value of bank agency acquisitions, he notes.

Sedgwick points out, too, that 2003s deal values were largely spiked by a single bank agency acquisition, announced in November 2003 by BB&T Insurance Services, a bank brokerage in Raleigh, N.C. BB&T said it plans to buy McGriff, Seibels & Williamson of Birmingham, Ala., for $354 million in cash and stock.

John Wepler, executive vice president of Marsh Berry, Concord, Ohio, says while fewer banks are looking at insurance agency acquisitions, those banks that are looking are very committed to the insurance business.

“Prior to this year, many banks were experimenting,” Wepler says. “Were confident that more will be getting into the insurance business, but were not sure of the extent. Theres a larger number of committed buyers but fewer total buyers.”

Agencies that sell employee benefits will be prime acquisition candidates, he believes, because many banks are looking to get at least half their insurance sales from group health and financial services and increasing their group life concentration.

Bob Grieb, managing director of the Bank Insurance and Securities Association, Wayne, Pa., believes banks are evolving from seeing life insurance as a single product to the view it is a wide range of products.

“Banks have a better understanding that insurance fits a lot of different customer needs,” Grieb says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, December 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.