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Wachovia May Buy Bigger Agencies

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NU Online News Service, Dec. 18, 2003, 6:07 p.m. EST – Wachovia Insurance Services, a unit of Wachovia Corp., Charlotte, N.C., is in a “breath-catching mode” after a series of recent insurance agency acquisitions, says Stewart McDowell, the unit’s newly named president. [@@]

When Wachovia Insurance does resume buying agencies, the deals will be significant, he predicts.

Wachovia Insurance has not bought any agencies in more than a year, but the company continues to evaluate candidates, says McDowell.

Wachovia picked McDowell earlier this week to take over from the current president, David Holton, who is retiring. McDowell is a 26-year veteran of the insurance industry. He joined Wachovia Insurance as chief operating officer in July from Willis Group Holdings Inc., New York.

“I think that future acquisitions will be within the scope of our existing product lines,” McDowell says. “We have historically purchased mainstream property-casualty and employee benefits brokerages, and the life side has also been a great line of business for us. We will continue to look for acquisition opportunities in those fields.”

One change to expect is “a change of appetite” as Wachovia looks for larger agencies, McDowell says.

“Our last acquisition was Cameron M. Harris & Company, and that was the largest one we’ve done,” McDowell notes. “It was extremely successful. I expect future acquisitions will be even larger than that.”

Wachovia bought Cameron Harris, a Charlotte-based insurance broker, in August 2002. Cameron Harris was the largest independent insurance broker in North Carolina.

Wachovia, formerly First Union Corp., also has acquired such brokerages as Barry, Evans, Josephs & Snipes (1999); Davis Baldwin (2000); the Tribus Companies (2000); Hamilton Dorsey Alston (2001); and the assets of Crawford, Slevin & Hicks (2001).

The acquisitions extended Wachovia’s insurance presence in Tampa, Atlanta, Northern Virginia, Maryland, New Jersey, New York and the District of Columbia.

In addition to paying for external growth, Wachovia has boosted sales with a program to train bank officers how to cross-sell insurance and other financial products.

“About half of our organic growth has come from cross-selling in the bank,” he says.

But Wachovia does not plan to license existing personnel to sell insurance, preferring instead to refer customers to professionals in its agencies, McDowell says.

To that end, the bank has established a relationship-building program. Bankers from the top level down to branch client-relationship managers seek opportunities to refer customers to other bank specialists.

Life insurance accounts for about 15% of the bank’s insurance revenues, McDowell says. But the company’s core business remains traditional commercial lines. Roughly 40% of that business is employee benefits business.

“Employee benefits represents an ever-growing cost and concern to businesses, and as they continue to look for solutions, that’s been a source of growth for us,” McDowell reports.