Big bank seeks insurance brokerage acquisitions – does it want your business?

A leading US bank is looking to expand its presence in the insurance sector by renewed M&A aspirations among brokerages

Insurance News

By

Wells Fargo & Co. is looking to expand its presence in the insurance sector with a wave of mergers and acquisitions of brokerages, Thompson Reuters reports.

The news comes after the bank abandoned its plans to acquire more brokerages years ago when it became clear that its existing businesses were still not fully integrated into the company.

Laura Schupbach, executive vice president and head of Wells Fargo Insurance Services USA, said the company chose to “hit the pause button” after inconsistencies among technology platforms and insurer contracts began to slow Wells Fargo’s 2,500-person brokerage and consulting unit.

Now, Schupbach says the bank has solved those problems and “upgraded talent,” and is looking to renew efforts to expand.
“We’re very interested in building out industry expertise,” she told Reuters.

Wells Fargo plans to look specifically for larger brokerages, as they are “used to serving clients with more sophisticated needs.” At the low end, this would be $20 million to $50 million. Schupbach declined to comment on a possible high end, but said the company was especially interested in operations working with healthcare, hospitals and agriculture.

If these ambitions don’t pan out, Schupbach assured Reuters the company can grow its insurance business without acquisitions.
It is a ripe time to expand, particularly after Wells Fargo’s August sale of its crop insurance business, which was thought to be valued at $1 billion. It retained the brokerage part of its crop insurance operations for itself.

“Wells Fargo regularly evaluates the strengths and strategic fit for each of its businesses. As our model continues to evolve, we are more focused on increasing cross-sell and growing the distribution side of the insurance business," a Wells Fargo spokeswoman said in a statement.

The sale came amid reports from grain analysts that crop insurance price guarantees for US corn, soybeans and spring wheat would drop 10% or more in 2015, based on futures settlement prices for February. A combination of low interest rates and severe weather such as flooding and drought have also combined to make the sector an undesirable one.
 
 

Keep up with the latest news and events

Join our mailing list, it’s free!