HRH To Purchase Banc of America Insurance

Insurance broker Hilb Rogal & Hobbs Company said it has signed a definitive agreement to acquire Banc of America Corporate Insurance Agency, L.L.C (BACIA). A dollar figure for the transaction was not disclosed.

BACIA is a subsidiary of Bank of America, headquartered in Charlotte, N.C., and has substantial middle-market brokerage business in the northeastern United States, the Richmond, Va.-based broker said.

BACIA's middle-market focus includes employee benefits, which comprises more than half of its revenues, public sector organizations and private equity businesses. The deal excludes the bank's consumer insurance business and is expected to be completed in the fourth quarter, subject to applicable regulatory approval.

Headquartered in Cranford, N.J., BACIA has 15 locations in seven states. Formed through the acquisition and integration of six independent agencies, BACIA has grown to reported 2006 revenues of approximately $66.3 million, HRH said. The acquisition will add more than 300 employees to HRH's payroll that now stands at around 4,000.

“This acquisition will enhance HRH's presence throughout the northeastern United States, especially with BACIA's strong concentration in the metropolitan markets of New Jersey, Pennsylvania and New York City, and additional growing practices in New England,” said HRH Chairman and Chief Executive Officer Martin L. “Mell” Vaughan III in a statement.

BACIA's president and chief executive officer, Stanley Jablonowski, said: “Joining HRH will allow us to expand the resources and services available to our existing clients and future clients. Our market strength throughout the Philadelphia-to-Boston corridor allows us to bring immediate value to HRH, and we look forward to expanding and growing our strength in these areas.”

James M. Campbell, a principal and senior vice president with Atlanta-based Reagan Consulting, said he thought the deal was a positive move for both parties.

For HRH it adds significant management and market capabilities, he noted. For Bank of America, it was a strategic move, he felt.

Mr. Campbell said the bank's brokerage firm was a very successful operation, but in comparison to the rest of its vast operations, it was a small portion of its overall revenues.

For Bank of America, he noted, the brokerage arm would have little impact on earnings or strategic development. Management, he reasoned, felt it was wiser to divest of the brokerage instead of continuing to try and grow the business.

John Wepler, president of the consulting firm Marsh, Berry & Co. Inc. based in Willougby, Ohio, said the sale of BACIA was beneficial to the brokerage arm because it was not receiving the corporate attention it needed from the parent in order to grow. The insurance business, he pointed out, was gained through other bank acquisitions and did not appear to be a core interest.

Mr. Wepler added that if Bank of America wanted to fill out its national footprint it would have needed a major acquisition to do so, which it appeared reluctant to do.

He noted too, that HRH and BACIA share the same culture for risk management and customer service. The unit has seen a lot of turnover, and under HRH leadership, BACIA should see “a coherent strategy to grow the business and provide clarity for its people.”

With its concentration in employee benefits, BACIA will also add substantially to HRH's bottom line, which is especially helpful in the current soft market, said Mr. Wepler.