Hibernia Corp., a player in the commercial property and casualty market since its acquisition of the former Rosenthal Agency in its hometown of New Orleans nearly two years ago, is pushing its way into the high-end life insurance market with another agency buy.
The high-end life insurance business fits well into Hibernias already growing insurance business, which is predominantly commercial property and casualty coverage, because many of its business clients need those products, said Robert J. Ellis, an executive vice president and manager of the private-client group at Hibernia National Bank.
As with Rosenthal, Hibernia is making its move through acquisition, this time buying Friedler-LaRocca Financial Partners LLC of New Orleans for $2.5 million, plus future considerations depending on performance. The deal closed last Tuesday. Hibernia also expanded its employee benefits business a year ago when it bought the book of business and the employment contracts of three specialists from Wright & Percy Insurance Inc., an agency in Shreveport, La.
Friedler-LaRocca is a small agency, but theyre doing all the sophisticated products, which is what we were looking for, Mr. Ellis said. Friedler-LaRocca now operates out of the banks private-client group. They are doing deferred compensation products for corporations, estate planning, and retirement planning, Mr. Ellis said. Theyre working with the high-end clients, and thats exactly what we needed.
Friedler-LaRocca had $3 million of revenues last year. And they only have seven producers, and a bulk of the production came from four of the agents, so these guys are a big deal, Mr. Ellis said.
Meanwhile, Hibernia Rosenthal, the entity that includes the former Rosenthal Agency, two smaller property and casualty agencies the company had bought before, and the employee benefits business, had revenues near $13.4 million last year. Hibernia Rosenthal operates as a business unit of Hibernia Insurance Agency, which had revenues of $25.9 million in 2001.
Like most banks, Hibernia bought a commercial property and casualty agency first, and thats the right way to go about it, said Craig Whitehead, a senior consultant at Milliman USA in Chicago.
They already had the business clients, so it makes sense to move into the commercial lines insurance first, Mr. Whitehead said. Its a less complicated line. With P&C insurance, its one line that covers the client. With life and health insurance, its much more complicated because youre dealing with the insurance of a conglomerate of individuals.
But Albert Lloyd, a vice president at Marsh, Berry & Co. in Concord, Ohio, and a consultant with expertise in bank purchases of insurance agencies, said it does not matter whether a bank buys a life agency or a property and casualty agency first.
Weve seen more of the property and casualty agencies because more of those exist, Mr. Lloyd said. But I put together a deal recently where the banks first buy was a life and benefits agency. They have often enough, and they work fine.
However, he said, a bank that buys a life agency first still should look for a property and casualty agency as well.
If you want to round out your services and maximize revenue, obviously you want to be in both, Mr. Lloyd said. Plus, you never know when either the life market or the P&C market go up or down. Since either lines market can go up or down, its a good idea to diversify revenue.
You can also set up joint ventures, but they usually dont work out, Mr. Lloyd said. Generally if other parts of the bank are struggling, the bank starts to pay less attention to the joint venture. There isnt a true, full commitment, and they usually fizzle. I dont like getting involved in them.
