Wachovia Corp., Charlotte, N.C., will get a nice boost to its annuity operations if it succeeds at plans to acquire SouthTrust Corp., Birmingham, Ala.[@@]
Wachovia already is the biggest bank seller of annuities, and the SouthTrust deal would make it even bigger, says Kenneth Kehrer, a Princeton, N.J., financial services expert.
“SouthTrust is among the top 12 banks in annuities,” Kehrer says.
The proposed deal would have a much smaller immediate effect on Wachovia’s insurance sales.
Although Wachovia ranked sixth in terms of U.S. bank insurance agency fee income in 2003, SouthTrust ranked only 110th, according to Michael White Associates, Radnor, Pa.
The banks are “really not comparable, even allowing for the difference in size,” says Michael White, head of the firm. “Wachovia is about 8 times bigger than SouthTrust in terms of assets but had 85 times the agency fee income.”
On the other hand, the deal “will give Wachovia an opportunity to expand its insurance business, because there’s plenty to do there,” White says.