Insurance: Cape Cod Bank Is Taking A Majority Stake In Personal And Commercial Lines Agency

Cape Cod Bank and Trust Co. of Hyannis, Mass., agreed Thursday to buy 51% of the stock of Murray & MacDonald Insurance Services Inc., a Falmouth, Mass.-based agency.

This is the $1.3 billion-asset banking company's first agency acquisition deal and would let it offer a broad menu of personal and commercial insurance. Terms of the deal, which is expected to close early next year, were not disclosed.

"We just think the more products we can offer, the better chance we have of retaining our customers," said Stephen B. Lawson, Cape Cod Bank's president and chief executive officer. Cape Cod has had its own broker-dealer for 10 years, and Mr. Lawson said he prefers to own businesses that offer financial services through Cape Cod Bank.

The 21-person agency has annual premium sales of more than $8.5 million and revenues of $1.3 million, said Douglas D. MacDonald, president of the agency. Mr. MacDonald, 41, said that unlike many agency principals selling out to banks, his goal is to remain part of the growing business.

Few banks have been satisfied with buying just a majority interest in agencies, said Valerie Jordan, president of Jordan & Jordan, a Belchertown, Mass., consulting firm. But with these types of deals, the principal is generally committed to expanding the business with the ever more important infusion of capital, instead of just cashing out, she said.

Mr. MacDonald, who would remain president of the agency, declined to say how the agency would invest in its operations or how it plans to approach cross-selling to the bank's 70,000 customers. Long-term insurance, would definitely be offered to bank customers because of the older, year-round Cape Cod population, Mr. Lawson and Mr. MacDonald both said.

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