First Horizon to Sell P&C Unit in Shift to Core Retail

First Horizon National Corp. has agreed to sell its property/casualty insurance unit to Brown & Brown Inc.

Terms of the sale were not disclosed, but First Horizon said it expects to recognize a gain of $3 million in the first quarter as a result of the deal.

The Memphis, Tenn., bank had not previously identified the insurance agency as a "non-strategic" unit that it was looking to sell, but the move didn't come as a complete surprise to some analysts either.

"This seemed like a break-even business and I don't think the conditions of the industry are that great in terms of pricing," said Kevin Fitzsimmons, a managing director at Sandler O'Neill and Partners. "I think they feel there is better opportunity in the retail banking business."

The sale is part of First Horizon's continued effort to focus on regional banking and capital markets, the bank said Thursday in a press release.

Insurance commissions at the bank have been on the decline for the past several quarters. They dropped to $4 million in the fourth quarter, down 31% from a year earlier.

Fitzsimmons estimates that the business accounted for only about 1% of total core revenue.

The sale underscores how closely banks have been assessing their various businesses and looking for ways to maximize capital, he said.

"Companies are scrutinizing their models to try and boost profitability," Fitzsimmons said.

The sale is expected to close in the second quarter. Brown & Brown is an insurance broker based in Daytona Beach, Fla.

 

This story has been reprinted with permission from American Banker.

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