Willis Completes Sale Of Stewart Smith

Willis Completes Sale Of Stewart Smith

By Mark E. Ruquet

NU Online News Service, April 14, 12:45 p.m. EDT?Willis Group Holdings brokerage has completed the sale of its wholesale unit, Stewart Smith Group, to American Wholesale Insurance Group (AmWINS) for an undisclosed amount.[@@]

The transaction cuts Willis' ties to a subsidiary that according to the New York Attorney General's Office was used to inflate fees to customers.

"We are pleased that in American Wholesale we have found a company and a management team committed to continuing to grow this line of business," said Joe Plumeri, chairman and chief executive officer of Willis in a statement.

"Bringing together Stewart Smith with our existing brokerage operation makes great sense," said M. Steven DeCarlo, president and CEO of AmWINS.

The acquisition will allow AmWINS to expand the Charlotte, N.C.-based wholesale brokerage group's operations in Florida, Tennessee, Michigan and Washington, he said.

Mark Smith, president and CEO of Stewart Smith under Willis, was named division president of AmWINS Brokerage.

"Bringing together AmWINS Brokerage and Stewart Smith is sure to result in one of the strongest and most well-respected resources available to independent agents and brokers in the country," Mr. Smith said.

Willis' sale of the wholesale unit comes in the wake of conflict of interest questions raised initially by New York Attorney General Eliot Spitzer.

Last week, London-headquartered Willis announced a settlement with Mr. Spitzer and Minnesota's Attorney General Mike Hatch in which the firm agreed to repay $51 million to customers who were harmed by Willis' fraud and anti-competitive practice.

A document outlining the settlement said in part that Willis had sent clients' business through Stewart Smith to inflate commissions, when it could have placed their business directly. Willis in agreeing to the settlement admitted no wrongdoing.

When the sale was announced in early February, Mr. Plumeri said Willis was looking to focus on its retail operations and divest itself of non-core business.

Stewart Smith writes hard-to-place, unique and specialty coverages. Based in New York, Stewart Smith has 13 branches located in major cities across the country and produced approximately $900 million in premium placements in 2004.

At the time the deal was announced, it was reported that the Stewart Smith acquisition would bring the broker's total premium placements to over $2.4 billion.

Willis is not the only brokerage to move for divestiture of a wholesale unit. In February, Chicago-based Aon's chairman and CEO Patrick Ryan said the firm is looking at alternatives to the ownership of its wholesale unit, Swett & Crawford.

In March, Thomas Comer, Swett & Crawford's CEO, resigned, raising speculation he could be maneuvering to purchase the firm with the help of investors.