Where Brokers Thrive In Banking Environment

WHITE SULPHUR SPRINGS, W.Va.–Some in the insurance industry may believe banking and insurance don't mix, but executives at two major insurance brokerage firms owned by banks have apparently found plenty of support for the entrepreneurial spirit that drives brokers.

They discussed the success of their enterprises with National Underwriter last week during the 94th annual Insurance Leadership Forum of the Council of Insurance Agents & Brokers held here.

Interviewed were David J. Zuercher, chairman, president and chief executive officer of Wells Fargo Insurance in Chicago; Samuel L. Jones, president and CEO of ABD Insurance in Redwood City, Calif., which was acquired by Wells Fargo at the beginning of this month; and H. Wade Reece, president, insurance services manager for Raleigh, N.C.-based BB&T Insurance Service Inc.

Both Wells Fargo and BB&T are considered to be among the top 10 insurance brokerages in the United States. In terms of brokerage fee income produced by banks, they placed second and third behind Citigroup in the first quarter of this year, according to a report from Michael White Associates Bank Insurance Consultants (see NU Online News Service, “Bank Insurance Brokers Quarterly Fee Income Hits $1.3B,” for July 17). Wells Fargo stood in second place with $357 million in fee income, and BB&T was third with more than $195 million.

Wells Fargo Insurance is owned by the San Francisco-based banking institution Wells Fargo and Company. It became a major brokerage player in 2001 when it acquired Chicago-based Acordia, which changed its name to Wells Fargo this year.

Mr. Zuercher said Wells Fargo initially kept the Acordia name in place because of its brand power with East Coast clients. What changed was Wells Fargo's national growth and the producer's insistence that the power of the parent's name was gaining stature.

There was also an impression among some clients that the firm's reluctance to adopt the parent's name was a sign the brokerage arm was either not healthy or was in line to be spun off, he said. Adopting the name, he explained, was aimed at dispelling those impressions and was a further indication of the parent's intention to continue to grow the business.

“The San Francisco office wants to grow and not see a decline in the brokerage business,” he said, adding that the name change also indicates insurance will fall under one umbrella for the entire enterprise.

With the addition of ABD, he said, Wells Fargo will now move to expand its risk management services and grow its brokerage operation in the Western region. ABD also brings a strong benefits operations to Wells Fargo.

“What keeps customers up at night is the cost of benefits,” noted Mr. Jones, and being a part of Wells Fargo will now bring those solutions into the fold where clients may have had to shop for help elsewhere.

ABD is no stranger to working with banks as it was part of Greater Bay Bancorp prior to the acquisition.

Over at BB&T, insurance has a long history, explained Mr. Reece. A part of Winston-Salem, N.C.-based Branch Banking & Trust Corporation, the insurance business at the company began in 1922 and has remained a “core business” since then, responsible for 13 percent of total revenues for the company and over half of its fee business.

“Banking and insurance started in North Carolina,” said Mr. Reece, noting that BB&T developed a decentralized, entrepreneurial spirit in order to compete in “a land of giants” with some of the largest commercial banks in the nation that began in the state.

“For us to exist and thrive, we had to focus on being different,” he observed.

Half of BB&T's business is in midsize accounts, personal lines and benefits business. The remaining half is split between large accounts and wholesale brokerage dominated by CRC Insurance Services Inc.

He said one advantage the firm has is discipline among all of BB&T's sales force to seek opportunities by viewing the broad picture instead of having a narrow focus.

“Plenty of people have relationships with our parent and not an insurance relationship,” said Mr. Reece. By cross selling banking and insurance products and services the aim is to get customers who stay with BB&T for the long haul.

For both Wells Fargo and BB&T, their plans call for future growth through a combination of cross selling and acquisition.

Mr. Zuercher said the aim is to grow and become “more relevant” to Wells Fargo as a whole in terms of revenue and for insurers to see the firm as a “strong distribution channel.”

Mr. Reece said BB&T will continue with its current business strategy and make acquisitions, saying the company hopes this will be a “banner year.” He said the firm will also “build out” the product and specialties that CRC offers as part of a long-term strategy for growth.

“We take a family approach [to integration],” said Mr. Reece. “We keep the fire alive and keep working.”