Banks are tapping into the insurance brokerage market and are producing impressive results. That’s the macro level view at least. Banks’ insurance brokerage fee income was up 18.7% in the first half of this year, compared to the same period in 2003, according to Michael White Associates, LLC (MWA).

MWA bases its figures on preliminary data reported to the Federal Deposit Insurance Corporation (FDIC) by more than 8,000 commercial and federally insured savings banks. Of this universe of banks, 46.4% reported some insurance brokerage fee income.

How much of this first-half growth was derived from bank-owned property/casualty insurance agencies is not shown. Nor is it possible, even, to determine how much of it is property/casualty insurance. (The income includes commissions and fees from credit, life, health, property, casualty, and title insurance as well as some annuity sales.) But still the figures provide further evidence of why many banks continue to be intrigued with the idea of owning property/casualty agencies.

The 15 top banks in insurance brokerage fee income, as measured by the MWA figures, include several that have been significant buyers of insurance P-C brokers: BB&T (which ranks second nationally in insurance brokerage fee income after boosting this income by 53.7% in the first half), Wells Fargo, Commerce Bank, BancorpSouth and Banknorth.

Bank insurance brokerage income also is going up in relation to total noninterest income, considered a crucial measuring stick of banks’ performance. Insurance brokerage income reached a mean figure of 2.8% of noninterest income, and 12 of the 15 leading insurance brokerage banks exceeded that mean ratio.

Recent transactions involving changes of ownership for property/casualty agencies and brokerage firms include the following:

Acordia, Inc. (, acquires Speare & Company of Sherman Oaks, California.

Speare & Company, which has operated for more than 50 years, offers a wide variety of P-C, life, health, and benefits products. It will continue to operate with its current staff at its Sherman Oaks location. “We can now offer our clients not only insurance products and risk management services, but also financial services through Wells Fargo” (Acordia’s parent), said Bob Bryar, president of Speare & Company.

Acordia describes Speare & Company as one of the largest privately held insurance brokerages in the western United States. The acquisition doubles the size of Acordia’s operations in Encino, California.

The acquisition is the 15th for Acordia since the company became part of Wells Fargo & Co. three years ago. Kevin W. Conboy, Acordia’s president and CEO, said, “Acordia will continue to look for acquisition opportunities that fit its operating philosophy and that expand Wells Fargo’s reach both inside and outside its 23 banking states.”

Arthur J. Gallagher & Co. ( acquires Sheridan Insurance Group, a retail malpractice insurance specialist.

Sheridan Insurance Group of Friendswood, Texas, does business as National Health Services, an insurance brokerage operation that specializes in structuring and placing medical malpractice insurance for more than 3,000 physicians and physician groups.

The associates of Sheridan Insurance Group, a 20-yearold agency, will continue operating the firm from their Friendswood, Texas, office as part of Gallagher’s South Central Region.

Banknorth Insurance Group ( is part of the sale of a majority interest in its banking parent-Banknorth Group-to TD Bank Financial Group, a large Canadian bank. TD Bank Financial Group, consisting of Toronto-Dominion Bank of Canada and its subsidiaries, is buying 51% of Banknorth for approximately US$3.8 billion.

Banknorth Insurance Group operates P-C agencies throughout New England, employing 400 people. Its most recent agency acquisition was Drake, Swan & Crocker of Orleans, Massachusetts (“Ownership Changes,” September Rough Notes).

TD Bank Financial Group President and Chief Executive Officer Ed Clark said the acquisition provides his company with “an expanding beachhead in the Northeastern United States and an outstanding personal and commercial banking complement to our strong U.S. wealth management franchise.”

The acquisition, which is expected to close by February 2005, also permits TD Bank Financial Group to bid for the remaining publicly held Banknorth shares subject to certain conditions.

Consumers Financial Corporation ( acquires Fear & Fear, Inc., of Syracuse, New York, for a purchase price valued at $6 million.

Fear & Fear has annual revenues of approximately $3 million, operating 11 offices plus one administrative office in the Syracuse area, specializing in auto insurance. Consumers Financial is a diversified merchant banking and financial services company, which invests in a variety of micro-cap businesses via acquisition, merger or joint venture.

F.N.B. Corporation ( acquires Morrell, Butz and Junker (MBJ) of Pittsburgh, Pennsylvania.

Morrell, Butz and Junker (MJB), a retail agency, was created by a merger in 1992 of S.J. Morrell, Inc., of Pittsburgh with Field and Clarke, Inc., of McKeesport. F.N.B. Corporation is a bank operating in western Pennsylvania and eastern Ohio.

The agency now becomes part of F.N.B.’s First National Insurance Agency, essentially doubling the size of the bank’s insurance agency subsidiary. The agency will have 85 employees and six offices in Western Pennsylvania, serving over 14,000 individual clients and 4,500 corporate clients. In addition to the former MBJ offices in Pittsburgh and Delmont, First National Insurance Agency operates offices in Meadville, Beaver Falls, Greenville, and Erie, Pennsylvania.

James J. Morrell, who served as the CEO of Morrell, Butz and Junker, becomes president and CEO of First National Insurance Agency; Randall C. Butz, a co-owner of Morrell, Butz and Junker, and James Pudlewski, of First National Insurance Agency, were named senior vice presidents.

“The acquisition of Morrell, Butz and Junker, Inc., gives First National Insurance Agency the strategic locations and experienced leadership it needs to solidify its presence in Western Pennsylvania,” said Stephen Gurgovits, president and CEO of F.N.B. Corporation, and chairman of First National Insurance Agency.

F.N.B., based in Hermitage, Pennsylvania, has $4.8 billion in assets. It owns and operates First National Bank of Pennsylvania; First National Trust Company; First National Investment Services Company; F.N.B. Investment Advisors, Inc.; First National Insurance Agency, Inc.; and Regency Finance Company. It also operates consumer finance offices in Tennessee.

HiIb Rogal & Hobbs (HRH) ( will acquire three agencies-two in Wisconsin and another in the Chicago area. The firms being acquired, which together represent almost $50 million in revenues, are Frank F. Haack & Associates, Inc., of Milwaukee, Wisconsin; Insurance Services, Inc., of Appleton, Wisconsin; and TJ. Adams Group, LLC, based in the Chicago area.

Frank H. Haack, an 87-year-old firm producing $22 million in annual revenues, had been a member of Assurex. It will continue operating from offices in Milwaukee and Green Bay under the existing leadership of Chairman and Chief Executive Officer William R. Haack and President and Chief Operating Officer James R. Mueller. Haack’s sister company, Zywave, was not part of the transaction and will continue to operate as an independent company.

Insurance Services, Inc., which has roots dating back to 1868, employs more than 50 people and produced more than $6.8 million in revenue in 2003. It will continue operating from offices in Appleton, Wisconsin, under the leadership of President Kelly P. Kornely.

T.J. Adams Group, LLC, has approximately 150 employees working out of two offices, in Lombard and Palatine, Illinois. It had been an Assurex agency, producing approximately $21 million in revenues in 2003. HRH is acquiring the operating assets.

Hub International of California purchases for an undisclosed amount of cash the assets of Payne & Company Insurance Brokers, Inc. (Payne), of West Los Angeles, California.

Payne, founded by John Payne in 1973, earns approximately $2 million in revenue from middle market commercial business, benefits, and personal insurance. It will relocate to Hub’s Los Angeles office, where John Payne, owner and president of the acquired firm, will serve as a senior vice president, reporting to Frank C. Hayes, president and CEO of Hub International of California, Inc.

Rose and Kiernan ( of East Greenbush, New York, is merging with The Daniels Agency of Pawling, New York.

Rose and Kiernan, is an employeeowned agency with roots going back to 1869. The Daniels Agency, founded in 1926, maintains agencies in Pawling and Poughkeepsie, New York; and Danbury, Connecticut. It is comprised of The Daniels Agency, The Settle Agency, and The Daniels Benefit Group.

The new combined firm will take the Rose and Kiernan name and will have a combined staff of 220 employees in 14 locations throughout New York state and Danbury, Connecticut.

USI Holdings Corporation ( agreed in principle to acquire Summit Global Partners.

Summit Global Partners (SGP), based in Dallas, is expected to contribute approximately $68 million of revenues to USI on an annual basis. SGP, founded in 1996, specializes in risk management and employee benefits for middle market companies throughout the United States. It has offices in California, Florida, Illinois, Michigan, Tennessee, Texas, New Mexico and Oklahoma.

The consummation of the transaction is expected to occur in the fourth quarter of 2004. It is the fourth transaction, and by far the largest, that USI has announced this year.

Copyright Rough Notes Co., Inc. Nov 2004

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