Buying Wachovia Corp. would make First Union Corp. the No. 2 banking company in the insurance business, trailing Wells Fargo & Co. but ahead of BB&T Corp., the current No. 2.

Last year First Union, Wachovia, and an agency that Wachovia is buying together generated $228 million of insurance revenue. That is less than half the $630 million that Wells Fargo and Acordia Inc., which Wells is buying, would have racked up, but more than BB&T’s $150.5 million.

John Wepler, vice president of merger and acquisition services at Marsh, Berry & Co., a Concord, Ohio, consulting firm, called the First Union-Wachovia deal “an amazing transaction in many regards, especially when you consider both of their commitments to the insurance business.”

Both banking companies have homegrown insurance operations — First Union’s was established in 1964 and Wachovia’s in 1994 — and both have been buying insurance agencies in the past couple of years, Mr. Wepler noted. North Carolina, where both companies are based — First Union in Charlotte, Wachovia in Winston-Salem — has never kept banks out of the industry.

Unanswered at this point is one interesting question: Who would run the combined insurance operation? The top insurance executive at each of the banking companies has had the job for a long time — David Holton at Wachovia’s since 1994 and David de Gorter at First Union since 1993.

A Wachovia spokesman said the executive structure of the insurance operation had not yet been decided, and a First Union spokeswoman said the companies were not ready to discuss plans for the operation.

Carmen Effron, the president of C.F. Effron Co. consulting firm in Westport, Conn., said the two operations match up well and provide many opportunities for synergy. “When you put the two insurance operations together, you’ll probably have the gamut” of products and services, including life, health, disability, commercial property/casualty, auto, homeowners, and other products, she said.

First Union made an investment in technology last year with the purchase of Pivot, an online insurance agency. The post-merger Wachovia — First Union plans to adopt its target’s name — could use that online capability to serve all its agencies, she said.

Today’s Wachovia offers life insurance quotes on its Web site but does not have an online agency.

Also, First Union has been developing proprietary life and annuity products for its customers for the past year and a half, Ms. Effron said. The additional insurance distribution network it would acquire from Wachovia would give it more outlets for newly developed products, she said.

Jon Balkind, an analyst with Fox-Pitt, Kelton in New York, said the deal would be good for both companies’ insurance operations. “Putting the different operations together gives them more size and clout in the marketplace, more leads, and added infrastructure off of which to do further acquisitions,” he said.

Wachovia, which owns DavisBaldwin Inc., a Tampa commercial property/casualty agency, does not have a large banking presence in Florida, but First Union does, Mr. Balkind said.

“The fact that First Union has a much stronger presence in Florida than Wachovia actually helps the amount of leads they may be able to generate for the DavisBaldwin operations.”

In fact, the combined company may generate enough leads in Florida that DavisBaldwin would need to expand, and the company would have to buy more agencies there, he said.

Both companies have said they are looking to buy agencies, and the combined company would probably look at agencies “from New York to Florida,” where they have bank branches, Mr. Balkind said.

The Wachovia spokesman confirmed that it still plans to buy Hamilton Dorsey Alston Co., an Atlanta property/casualty and employee benefits insurance agency it announced it would acquire last month. Wachovia Insurance generated $45 million of revenue from its two agencies, DavisBaldwin and Barry, Evans, Josephs & Snipes Inc., a Charlotte, N.C., a life insurance agency. Hamilton Dorsey generated about $20 million.

First Union formed Tribus First Union Insurance Services last year by acquiring Tribus Cos., which had $24 million of revenue, and combining it with its own Mid-Atlantic Agency. First Union Insurance Group, which includes Tribus First Union, generated $163 million of insurance revenue last year — $24.3 million of property/casualty, $64 million of life insurance, and the rest mainly from annuities.

Jim Campbell, senior vice president of Reagan Consulting Inc. in Atlanta, said consolidating the insurance operations would help all the agencies grow. “Insurance is a premium volume business. The more premium volume you have, the more the balance of power with the carriers shifts your way.”

Leverage with carriers allows agencies to develop special programs for their clients, he said.

Also, a sizable insurance organization is more likely to get the attention of a banking company’s management than a small one, Mr. Campbell said. “Most insurance operations make a pretty small contribution to the bottom line of the bank,” and therefore are not necessarily high on the priority list of executives, but a large operation would contribute more and therefore get more attention, he said.

However, last year the two companies generated only about 1.2% of their $18.85 billion of combined revenue from insurance last year.

Still, insurance and banking experts highlighted the depth of the insurance talent in both organizations. First Union and Wachovia retained their agencies’ top executives, such as Don Tribus, president of Tribus Cos., and John C. Hamilton, head of Hamilton Dorsey. Also, Mr. de Gorter and Mr. Holton (both of whom declined to be interviewed for this article) get top marks from industry watchers.

Mr. Wepler says these executives would have no problem working together to build an insurance unit that is more than the sum of its parts. “You’ll read a lot in the press about how different First Union and Wachovia are, but one thing that is very consistent about the two organizations is the culture of their insurance operations.”

Both entities see insurance as a way to “enhance their consultative relationships with their growth-oriented commercial and high-net-worth individual customers,” he said.

Mr. Wepler predicts that the growth opportunities would force the combined company to retain all its current talent and bring in other experienced executives. “It’s not who is going to leave, it’s who else do they need to bring on.”

However, Ms. Effron said the large number of talented people at both institutions may cause some fallout as the two insurance operations combine. “It will be interesting to see who’s going to come out on top,” she said.

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