Acordia Inc., the insurance agency arm of Wells Fargo & Co., sent a clear message in September that its integration with Wells Fargo is complete and it is once again an active buyer of agencies.Last month, Acordia announced three deals for agencies in Texas, Nebraska, and Pennsylvania. These purchases came on the heels of the purchase of a fourth agency, in Omaha, Neb., in August.
"We were out of the acquisition business for a year, but we are back in it," says Kevin Conboy, the CEO of the nation's largest bank-owned insurance agency.
Bigger footprint
Acordia, which is based in Chicago, reported 2002 revenues of $533 million, up 10.7% from 2001. This increase "is pretty much all internal growth," Conboy adds.
Now, with the relationship between Acordia and Wells Fargo well-established, the agency-which had bought more than 80 agencies in the seven years before Wells bought it in May 2001-is back in the acquisition game.
"We're very interested in expanding the Acordia footprint within Wells Fargo's footprint, to enhance and expand our cross-sell opportunities between Acordia, Wells Fargo, and other subsidiaries," Conboy says.
Wells Fargo's insurance revenues-including Acordia as well as personal lines, life insurance, and direct sales-totaled nearly $1 billion in 2002, according to data from the American Bankers Insurance Association in Washington.
"The bank has been absolutely phenomenal in terms of giving Acordia dedicated resources and capital commitment to our cross-selling efforts," Conboy says. "We've added a number of sales professionals that are totally dedicated to the cross-selling process, and we've added regional business development officers to facilitate relationships between the bank and Acordia."
Acordia has done about 10 deals, mainly small and midsize, since Wells bought it, Conboy says. There was a period right after the Wells purchase when acquisitions slowed, he adds, but now the agency is on the lookout again.
"There is a period of time in any acquisition where it takes time for each organization to get to know one another," Conboy explains. "That point happened quickly with Wells."
Expansion plans
The recent Acordia acquisitions include Wisenberg Insurance and Risk Manage-ment in Houston; the assets and business of McDermott Broker-age Inc. in Omaha; and the assets and business of Goodritz-Emanuel Insurance in Bala Cynwyd, Pa. In August, Acordia bought Care Insur-ance Services of Omaha, Neb.
Though his focus is mainly on deals in the West and Midwest, Conboy says Acordia would not rule out a purchase in another part of the country if the fit was good. He adds that Acordia is looking to expand not only through acquisitions but also by building operations organically, adding expertise and new ventures.
Last October, the agency formed Acordia Re, a reinsurance brokerage subsidiary based in Princeton, N.J. In March, Acordia set up a directors and officers practice group called Acordia Risk Finance.
The group is intended to help clients protect themselves against the risks associated with corporate governance, errors and omissions, employment practices liability, and environmental liability.
In addition, Acordia set up a corporate resource last month for clients' "captive" insurance operations and alternative risk opportunities, according to Conboy.
James Campbell, a senior vice president at Reagan Consulting in Atlanta, says that most big banks are growing their insurance businesses by acquiring agencies. Acordia, he adds, has a strong reputation in the industry, but it and other big agencies face some challenges as they try to find the best purchase candidates. "Assuming that they are going to be looking at pieces of some size, there's a lot of competition for them," Campbell says.
With larger, high-quality agencies, "a bank that is looking for a platform piece might have a stronger value proposition," he said, because such agencies could become the foundation on which the bank builds its insurance business instead of just being absorbed into a larger operation.
However, Acordia retains an edge because "any prospective seller knows them and knows who they are and what they do," Campbell adds.
This article first appeared in American Banker, a Thomson Media publication. It has been edited for this publication.
