Sky Financial Group Inc. says it plans to remain in acquisition mode for employee benefits and property/casualty agencies after its insurance arm closed deals for two such companies this week.
Sky Insurance aims to expand the two business lines to appeal to a broader client base, said Jerry Batt, the insurance unit's president.
"They are certainly products that we understand and that we're comfortable with," he said. Sky aspires to become a "one-stop shopping" store for retail and commercial customers, offering a full menu of insurance products, he added.
Sky Insurance ultimately hopes to join the top 25 bank-insurance operations in the country, Mr. Batt said. It has $52 million of annual revenue.
Sky Financial, a $15.2 billion-asset banking company in Bowling Green, Ohio, announced on Tuesday that it had bought Becker-McDowell Agency Inc., which specializes in employee benefits, and Steiner Insurance Agency Inc., which focuses on property and casualty insurance. Both are based in Wooster, Ohio, where Sky has a bank branch but did not previously have an agency.
The agency deals made sense strategically because they let Sky extend its geographical reach in Ohio, its core market, Mr. Batt said.
Kevin Reevey, an analyst at Ryan, Beck & Co. in New York, predicted in a research note last year that Ohio will have generated $60.2 billion of wealth by 2007, measuring from five years before. That would be 3% of all wealth created nationwide during the period, he wrote.
The Becker-McDowell and Steiner acquisitions should help Sky Financial attain its goal of being a full-service provider of financial services, Mr. Reevey said in an interview Wednesday.
"The acquisitions enable them to offer a broader array of products," he said. Sky Financial has been active in mergers and acquisitions during recent years, notably in its purchases of nonbank financial institutions, he said.
The Wooster agencies are relatively small and are not expected to have a significant impact on the parent's revenues, said Jeff Davis, an analyst at FTN Midwest Research Securities Corp. in Nashville, but he agreed that making the deals was a solid strategic move for Sky Financial. The two agencies combined will add $6 million of revenue, Sky Financial said.
"They're not going to move the revenue needle dramatically or perhaps even noticeably," Mr. Davis said. But insurance products will introduce significant cross-selling opportunities for Sky Financial, he said.
"Layering-in insurance agencies makes sense," he said. "It's a natural cross-sell for the bank customer base."
Insurance agency purchases also reduce Sky Financial's dependence on interest income from its investments, Mr. Davis added. "They are still predominantly a net-interest-income and spread bank," he said. "Net interest margins are under cyclical pressure and structural pressure."
Sky Financial has been an active acquirer in recent years. Last December it bought Columbus, Ohio's Prospect Bancshares, a five-branch community banking company. Other deals in the past two years brought in Second Bancorp in Warren, Ohio, and Belmont Bancorp in Wheeling, W.Va.
Among insurance-related deals, in August, Sky bought Benefit Design Agency of Ohio Inc., a small employee benefits firm in Findlay.
