First Charter Corp. may be small — the bank holding company has assets of $2.8 billion — but its aspirations as a multiline insurance provider rival those of much bigger banks.

Two years ago the Charlotte, N.C., company established the First Charter Insurance Services agency, which houses its nonannuity insurance activities. Since then it has bought six commercial and personal lines agencies in the region, which is considered the second-fastest-growing metropolitan area in the country after Phoenix.

Moreover, Clarkson McLean, First Charter Insurance’s president, says the unit plans to expand in 2001 into group life and health insurance.

The acquired agencies are in Charlotte, Huntersville, Shelby, and Monroe — North Carolina cities where the parent has branches. The most recent purchase, which closed Sept. 1, added Business Insurer Services of Guilford County, in Greensboro, where First Charter has a loan office but not a full-line banking and financial services operation.

Life and health insurance are to be run from a special department within the agency. Products will include group life, group health (including personal provider organizations and health maintenance organizations), and long-term-care and disability.

“We want to build it internally because we haven’t yet found the agency with the kind of business mix on the life and health side that we want to build,” Mr. McLean said.

This is a natural extension of the business lines that make up 75% of First Charter Insurance’s business, Mr. McLean added. He would not give the agency’s premium volume.

He also aims to build the property-casualty business “to even out the percentages,” but not through further purchases.

“Most of the agencies we’ve acquired have been stronger in business insurance. But I intend to grow the property-casualty side” organically.

Mr. McLean owned a property-casualty agency for 20 years and spent a few years at First Union’s life insurance department before joining First Charter in 1998 to set up its agency.

“The bank is looking to develop its sources of noninterest income,” he said.

Douglas C. Moat, a New York-based bank insurance consultant, says there are several reasons why more and more banks are buying insurance agencies. Though insurance companies traditionally have returns on statutory capital (the insurance equivalent of return on equity) of about 6%, the returns obtained by insurance brokers tend to be even higher than banks’.

“Agents and brokers have ROCs of 20% to 30%,” Mr. Moat said. Banks are “seeing these returns and want to get at some of it, and to access some of those customers.”

These brokers have relatively little capital, but that can be a good attribute in bankers’ eyes, Mr. Moat said.

Ultimately, however, the return a bank gets on an insurance agency acquisition depends on how much it spent on the purchase, said Ken Kehrer, a Princeton, N.J.-based bank-insurance consultant.

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