Union Bank of California’s consolidation of its insurance agencies under one brand should give it an edge as it tries to nearly double its annual insurance revenue within three years, to $150 million, the insurance unit’s chief says.
“We can’t tell the world we’re a meaningful player in the space unless we have a unified brand,” Johannes Worsoe, an executive vice president of the bank unit of UnionBanCal Corp. and chairman of its insurance subsidiary, UnionBanc Insurance Services Inc., said in an interview Monday. UnionBanCal is majority-owned by Mitsubishi UFJ Financial Group Inc.
Mr. Worsoe estimated the insurance unit’s 2005 revenue at $80 million.
Union Bank reported $41.4 million of insurance revenue for the first half of 2005, according to Michael White Associates, a bank insurance consulting firm in Radnor, Pa. Insurance fee income of $77.9 million in 2004 was 7.7% of the bank’s noninterest income, and the first half’s $41 million was 8.9% of noninterest income. Full-year results were not yet available.
“We want to run a single agency as opposed to running a portfolio of agencies,” Mr. Worsoe said. “When you’re running a portfolio of agencies, you have no synergies, you have separate systems, and branding yourself is a bit of a mess.”
Integration became imperative for UnionBanc Insurance, he said, as banks continued to capture market share through agency purchases, making it more difficult for small insurance operations to compete.
“It will be an industry of larger agencies with deep expertise and a strong value proposition for clients,” he said. “The little agencies built on relationships will go away.”
Each of the four California insurance agencies that the bank’s San Francisco-based parent has bought since 2001 is now a separate division of UnionBanc Insurance. The agencies — Armstrong Robitaille Business and Insurance Services, John Burnham Insurance Services, Tanner Insurance Brokers, and Knight Insurance Agency — employ 415 professionals.
The insurance subsidiary will operate three regional offices, focusing on Northern California and Orange County and San Diego in Southern California, Mr. Worsoe said. UnionBanCal Corp. will try to expand its footprint in California and Oregon and will seek potential acquisitions late this year, he said.
“It’s a pretty regional business, so we’re not going to create a single headquarters,” he said.
In weighing acquisition targets, he added, UnionBanc Insurance will seek agencies that have a niche expertise and will support expansion within the desired footprint.
Integrating the agencies will let Union Bank streamline management and administration, said Michael White, president of the Pennsylvania consulting firm. The bank was ranked 12th among U.S. bank holding companies in terms of insurance fee income at June 30, his firm said.
The consolidation will facilitate cross-selling between the bank and its insurance arm, Mr. Worsoe said. Union Bank has focused on selling commercial property and casualty insurance in the past but is planning to expand its personal insurance offerings significantly, he said.
Personal insurance will complement Union Bank’s menu of investment products, which the bank has broadened considerably in recent years, he said. The bank hopes to begin distributing life insurance in-house rather than through external carriers and wholesalers. It has access to products from many carriers under an “open architecture” approach, he said.
“We want to have a broad range of offerings for clients,” he said. “We need the muscle in-house to serve clients and make sure we have the expertise on staff. We feel we have size to be able to accomplish that.”
