RALEIGH, N.C .- BB&T Corp.'s insurance chief has planned his spring vacation around the life cycle of an insect.

H. Wade Reece plans to be in the mountains of western Maine with a fly-rod in hand at the exact moment the green drake hatch begins. As the tiny insect emerges on the water surface, trout will begin a feeding frenzy - and that's when Mr. Reece will cast them a line. Mr. Reece knows the importance of being in the right place at the right time. It's a strategy he has applied to building the bank's insurance business.

Long before other commercial banks saw an opportunity in insurance, Mr. Reece argued that it could be a key to building relationships and fee income for banks. BB&T executives liked his reasoning and gave him wide latitude to expand a sleepy business that BB&T had entered in 1922.

So Mr. Reece went on a feeding frenzy of his own. In the nine years he has led BB&T's insurance effort, the bank has acquired 35 agencies focused on property and casualty, an area he believes offers the best cross-selling opportunities. Because bank customers typically have to buy homeowner's and auto insurance, property and casualty is an easier first sale, Mr. Reece said. Those customers are then offered life insurance, he said.

This year alone Mr. Reece has acquired 12 agencies, though he is now taking a self-imposed break because of year-2000 concerns. So far the bank has acquired agencies in the Carolinas, Georgia, and Virginia. Next year it plans to look again at Georgia and also at Maryland, but to pursue acquisitions at a slower pace.

Using the acquisitions as a foundation, Mr. Reece, president of the insurance unit, has built Raleigh, N.C.-based BB&T Insurance Services into the 12th-largest independent insurance agency in the United States, ranked by revenue, and the largest in the Carolinas. By the end of this year Mr. Reece projects insurance revenues of $80 million excluding annuity sales, an increase of $30 million over last year.

A 22-year BB&T veteran, Mr. Reece has helped establish the Winston-Salem, N.C., company as a model for banks looking to get into insurance. Time and again, bankers building insurance programs say "we want to be like BB&T." However, some observers question the mechanics of a multiple acquisition strategy.

Mr. Reece said BB&T, which has also acquired numerous banks, has built systems that smooth out the process.

"We treat acquisitions as a line of business," Mr. Reece said. To that end, Mr. Reece has appointed one executive, Bronna B. Greer, to handle all the acquisitions. Ms. Greer spends her time analyzing opportunities and serving as a contact for all acquired agent principals as they integrate into the BB&T universe.

The early deals were for smaller agencies that had sterling sales cultures, he said. "I stuck to my guns on that," Mr. Reece said.

Today, BB&T first targets agencies by region. Though the agency is run largely independent of the bank, acquisitions are made in areas where BB&T has a banking presence. The agency studies demographics and incomes in prospective areas of expansion, and assesses business needs to see if the bank's insurance strategy will fit. This disciplined analysis of markets has led to acquisitions in areas bank executives might not have considered initially, Mr. Reece said.

Using this kind of approach, Mr. Reece said, he discovered that Macon, Ga., for example, presented good demographics for insurance sales, contrary to his expectations. In September, BB&T acquired Macon Insurance Associates.

When an area is considered ripe, the bank seeks to identify quality agencies with strong sales numbers. "We won't look at an agency if its return on equity is less than 15%, Mr. Reece said.

That approach has led BB&T Insurance to post a return on investment (ROI) of 17% and return on equity (ROE) of 26%, according to Mr. Reece.

That's a standout performance among banks selling insurance, said John M. Wepler, a principal with Marsh Berry Co., a Concord, Ohio, consulting firm that works with bank and nonbank insurance agencies.

"If they're hitting 17% ROI, good for them, that's strong," Mr. Wepler said.

To purchase top-performing agencies, Mr. Reece insists that he is not paying a premium, as some independent agents have suggested. He said the bank pays 7 to 9 times projected after-tax earnings for companies.

Mr. Wepler said most banks don't drive such a hard bargain. Banks new to the business pay about 11.4 for their first deals and generally get the price down to an average of 10.2 in subsequent deals, Marsh Berry statistics show. "They are ahead of the life cycle among bank-owned agencies," Mr. Wepler said.

Agencies that are not owned by banks typically pay about 8.25 times after-tax earnings, Mr. Wepler said.

Agents looking to expand their business choose BB&T over the competition because they can "kick the tires" of BB&T's proven operation, Mr. Reece said. BB&T's size and market clout present more opportunities for agencies, and principals often receive performance-based stock options, he said.

Once a deal is announced, Ms. Greer spearheads the process until closing. Ms. Greer's dedication to the effort helps close deals about two months after their announcement, Mr. Reece said. But he says that through experience, he has learned that it is better to slowly bring an agency onto the payroll and computer systems of BB&T rather than force matters.

"It takes six to nine months before we go ahead and do integration," Mr. Reece said.

That need for patience was reinforced by one recent acquisition experience, when the agency demanded immediate integration to gain cross-selling opportunities. Though he advised against the move, Mr. Reece acquiesced in part to avoid stifling agencies through too many imposed decisions. However, the integration turned out poorly. As the agency struggled to learn new systems, attention was diverted from sales, and revenues fell through the floor, Mr. Reece said. He declined to name the agency. These days BB&T also avoids information-packed educational seminars in the first weeks after an agency has been acquired. Slowing that down allows agents to develop questions and absorb the information well when it is presented, he said.

Richard L. Meador sold the insurance agency his grandfather founded in 1911 to BB&T last May. He went from being president and chief executive officer of 44-employee Barger Insurance Network in Waynesboro, Va., to being a senior vice president in charge of BB&T Insurance Services Virginia operations.

Barger's assimilation into BB&T Insurance Services was gradual, Mr. Meador said.

"There was no 'Here it is today and you have to do this' " kind of attitude, he said. Changes took place over three to four months on a schedule, and BB&T hasn't meddled with the way Barger sells insurance, he said.

Mr. Reece said he is working on increasing the cross-selling opportunities available through the bank, which currently bring in 15% to 20% of new premiums. However, he said he would like to see that increase to 50% within three to four years.

"That number again exceeds the expectations of many banks in the business," Mr. Wepler said.

"The reason they're hitting such a good ROI is because they have a better than average showing on their cross-pollination," Mr. Wepler said.

Though BB&T Insurance Services rightly has a reputation as a property and casualty specialist - 74% of its revenues come from that sector - life insurance has been another factor in the agency's growth.

That business has been cultivated entirely from scratch by Jim Farmer.

Mr. Farmer, a senior vice president, began building the life insurance component in 1981 and now oversees employee benefits, life and financial planning, and title insurance. Life insurance generates 21% of BB&T Insurance Services' overall revenues. If cross-selling meets expectations, life insurance could account for 40% of insurance revenues, Mr. Farmer said.

Mr. Farmer's strategy includes personal contact with affluent customers during the estate planning process, and telephone sales to middle-income clients.

In 1995 the bank began to sell mass-marketed term life and accident and disability insurance to its customers through a call center. This year four agents work the phones. Each is expected to sell 2,000 policies a year.

Middle-market customers present a good business opportunity, said Pat Brooks, supervisor of the Wilson, N.C.-based life insurance sales center. Many of them not only lack adequate insurance but also do not understand the differences in insurance options, Mr. Brooks said.

John Curran, president of the insurance unit of Portland, Maine-based Peoples Heritage Financial Group, has looked carefully at BB&T. He commended Mr. Reece for his ability to listen to a variety of ideas but still make quick decisions.

"He has a grasp of the insurance business and he has it with a banking mind - he has the right blend," Mr. Curran said.

Mr. Curran is exploring a deal with BB&T; the two insurance subsidiaries would jointly seek tailored product from insurers. That made sense because they do not compete and share similar strategies. Like BB&T, Peoples Heritage has been buying agencies across numerous states while maintaining an independent agency feel by operating away from bank headquarters.

As an insurance executive now at a bank-owned agency, Mr. Curran said he has learned some tricks from Mr. Reece. An example is in referrals.

"We get a lot thrown our way; they work hard at getting what they want thrown their way," he said.

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