Large banking companies getting into insurance usually buy large agencies - witness Wells Fargo & Co.'s purchase of Acordia Inc. in May. BB&T Corp. has a more grass-roots strategy.
Over the past few years the $68.9 billion-asset company, which is based in Winston-Salem, N.C., has been buying small and midsize agencies and tucking them into its operation. It now owns 19 in Virginia, four in South Carolina, five in George, three in Maryland, two in West Virginia, one in Tennessee, and 30 in its home state. And insurance revenues totaled $145.3 million last year.
The idea, said Wade Reece, the president of BB&T Insurance Services in Raleigh, is to sink more roots in communities where Branch Banking and Trust Co. has a branch. And it has more than 1,000, in nine states plus the District of Columbia.
"We believe very strongly that insurance is a relationship business, and BB&T is a relationship-oriented bank," Mr. Reece said.
Last year BB&T acquired six agencies - and the buying continues.
- The company announced Tuesday that it had arranged to buy its 65th agency, and its sixth so far this year - Lowery D. Finley & Co. of Virginia Beach, Va., for an undisclosed price.
- In the next week or two BB&T will announce deals to buy two more agencies, Mr. Reece said; he gave no details.
- Earlier this month the company picked up three agencies at once by buying their owner, $4 billion-asset F&M National Corp. of Winchester, Va., in a $1.17 billion stock swap. (The agencies sell property/casualty insurance, employee benefits, and annuities.)
- The first quarter brought the purchase of Clark Consulting Group Inc., an employee benefits agency in Roanoke, Va.; and Stephens & Company Insurance Services Inc. of Kennesaw, Ga. (Stephens sells property/casualty insurance and employee benefits.)
Mr. Reece said the Finley deal will probably close in September. The agency's name will become BB&T-Lowery D. Finley, he said, but all current employees will be retained, and its president, James D. Finley 3d, will become its manager.Finley will be BB&T Insurance's first property/casualty agency in Virginia Beach's Hampton Roads area, where it already owns a title insurance agency, he said.
The Finley agency sold about $7 million in premiums last year. The average agency BB&T buys sells $50 million, Mr. Reece said, but Finley will grow fast because BB&T's bank has a substantial share of the Virginia Beach market. "There is lots of cross-sell potential."
This fits in with how BB&T's integrates an agency, Mr. Reece said. First comes using the new agency's carrier relationships to give the other agencies access to more products. Next is introducing the agency into the bank's cross-selling system, which provides referrals and prospects for insurance sales. Only then does BB&T deal with organizational issues like payroll, benefits, and databases, Mr. Reece said.
"We treat acquisition as a line of business, and have processes we follow," he said.
James Campbell, senior vice president of Reagan Consulting Inc., an Atlanta firm that brokers bank-agency deals, said this approach shows BB&T knows what it is doing when buying agencies. In an acquisition, back-office issues are a necessary chore and "not the priority," he said. "That's not why you're acquiring these businesses."
Agency owners are very entrepreneurial, he said. "The last thing you want to do is come in and start hitting these people with a lot of these bureaucratic issues."
Mr. Campbell said BB&T Corp. is following "a very viable strategy for a bank that is serious about the insurance business." He praised the company for the way it picks buyout targets, pursues them, structures the deals, and works the purchases into its system.
"Some banks are interested in emulating BB&T on some level. I tell them, 'Don't think there's a magic bullet or a magic formula,' " he said. BB&T's deals work because the bank "understands what has made these agencies successful and they know how to retain that," he said.
Craig Whitehead, a senior consultant with Milliman USA, a Chicago consulting firm, said the insurance agency purchases are part of BB&T's commitment "to stay a player in the Southeast."
The company acquires strong personnel in a market when it buys an agency there, he said. "You need skilled hands working with bank clients," he said. But he warned that it may bite off more than it can chew.
"The danger is, they will spend so much time in consolidation and integration that they won't have time to really dominate their markets," he said.
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