BB&T Corp.'s insurance brokerage business has posted 45% compound annual revenue growth over the past 10 years.
But because BB&T Insurance Services Inc. has gotten so large, those growth rates will be impossible to sustain over the next five years, according to Wade Reece, the unit's president. It is on track to generate revenue of more than $900 million in 2007, he said.
"You'd have to have a huge acquisition to keep up that pace," Mr. Reece said. The insurance business' compound annual growth rate will probably be "more in the 20s," he said.
BB&T Corp., of Winston-Salem, N.C., has bought 78 insurance agencies over the past 15 and a half years. It owns 83 agencies in North Carolina, Virginia, Georgia, South Carolina, Maryland, West Virginia, Tennessee, Florida, Kentucky, and Alabama.
With 2006 insurance brokerage fee income of nearly $806 million, BB&T topped all banks in the Southeast and ranked fourth among banks nationally, according to the Michael White-Symetra Bank Holding Company Fee Income Report.
Nearly 13% of BB&T's net operating revenue comes from insurance brokerage fee income, ranking it first in the nation among banks with more than $10 billion of assets, the report said.
On June 27, BB&T announced it was buying Carswell Insurance Services of Hilton Head Island, S.C. Carswell, which sells commercial and personal property and casualty insurance as well as group benefits insurance, has annual revenue of $9 million. The deal is expected to close this month.
"In this case, we've been wanting something in the coastal South Carolina area for quite some time," Mr. Reece said. "We were really just looking for the right match."
BB&T Insurance Services, which is based in Raleigh, has a network of insurance offices across its service area, mostly in the Middle Atlantic and the South. That means its future acquisitions will be aimed at filling in gaps.
That was the case in late May when BB&T agreed to buy Reese Insurance Associates Inc. of Riverdale, Ga. That agency, which will help BB&T expand in the Atlanta area, sells commercial and personal property and casualty insurance and group benefits insurance.
One way that BB&T Insurance Services aims to maximize growth is by focusing on industry niches. It offers staples such as property and casualty, life, health, and employee benefits policies, but it also specializes in areas such as energy, health care, construction, and transportation, he said.
Another strategy is to set up in places BB&T's rivals might find unattractive. The Carswell deal is an example, Mr. Reece said. "Not everybody has a lot of coastal expertise," he said, referring to covering catastrophe-prone properties. "We have developed a tremendous amount of expertise in that over the years."
Florida is BB&T's top priority for agency deals, he said. BB&T has three agencies in Florida and room to expand, Mr. Reece said.
BB&T has offices as far away as California and Washington state and has customers nationally. But it makes so sense for it to open offices in a region such as the Northeast; the parent company has no operations there, so cross-selling would not be part of the equation, Mr. Reece said. "We concentrate on the Northeast already with a large-account strategy," he said. "But we can do that out of existing offices."
BB&T relies heavily on its insurance business to provide noninterest income. Its insurance brokerage fee income last year accounted for 31% of such income, ranking it second among large institutions, according to the Michael White-Symetra report.
