M&T Bank Corp.’s purchase of a Maryland agency last week moved its insurance operation for the first time into the Middle Atlantic region it entered with a big bank deal in 2003, and it may have nearly doubled the unit’s revenue.
The deal for Hess Egan Hagerty & L’Hommedieu Inc., a commercial insurance specialist in Chevy Chase, Md., fits M&T Insurance Agency Inc.’s focus on commercial insurance as well as the parent’s expansion into Maryland, Virginia, and Washington, D.C., said John Rumschik, the unit’s president and chief operating officer.
Mr. Rumschik declined to specify his unit’s revenue or Hess Egan’s, but he told American Banker last March that the property and casualty business was generating $10 million of annual revenue. And Hess Egan’s annual revenue has been estimated at $5 million to $10 million. Mr. Rumschik also declined to discuss revenue goals.
M&T Bank Corp. expanded dramatically outside its upstate New York home region with its $3 billion purchase of Baltimore’s Allfirst Financial Inc., then a unit of Allied Irish Banks PLC. Before the Hess Egan deal, M&T Insurance had agency operations only in Buffalo and Syracuse, N.Y.
“This is a significant acquisition in terms of the size of it,” said James Campbell, an analyst at Reagan Consulting Inc. in Atlanta who has worked with M&T. “They’re able to expand their insurance distribution through an expanded footprint. It’s a key area they had been looking at.”
Mr. Rumschik declined to discuss any future acquisition plan, but in an interview last year, he said the bank was seeking agency deals in upstate New York, central Pennsylvania, and the Maryland-Virginia-District of Columbia markets where it operates.
Commercial insurance has been the primary focus for M&T’s insurance arm, and the Hess Egan purchase is strategically located for the bank, Mr. Campbell said. “The bulk of their business is in commercial lines,” he said. “It’s the business they’re most interested in building.”
When considering agency deals, M&T evaluates the quality of the agents, their brand-name recognition within the market, business strategy, and commercial product lineup, Mr. Rumschik said. The Hess Egan deal presents new cross-selling opportunities, he said.
“Hess has a strong reputation in delivering quality property and casualty and surety products and services to clients,” he said. “We can now offer those services to M&T bank clients.”
M&T has been in the insurance business about six years, Mr. Rumschik said, and the bank likes it because it is relatively low-risk and bolsters fee revenue. Insurance has been a successful product line because M&T’s commercial bank clients want commercial insurance, he said.
