About a year after making its first insurance agency acquisition, Wachovia Corp. is preparing to make its second, insurance and banking sources say.
They said the $70.8 billion-asset banking company is close to reaching an agreement to buy DavisBaldwin Insurance and Risk Management of Tampa, a specialist in commercial insurance.
David Holton, president of Wachovia Insurance Services in Winston-Salem, N.C., would not comment, but two sources said talk of a deal with DavisBaldwin "has been around for a while."
"My guess is the deal will be announced within a month," a banking expert said.
Wachovia's first insurance agency purchase brought it Barry, Evans, Josephs & Snipes of Charlotte and Greensboro, N.C., in September 1999. Established in 1983, Barry Evans manages more than $3 billion of life insurance coverage. It also does work in wealth transfer and executive benefits and has kept its name under Wachovia.
DavisBaldwin, Florida's largest privately held insurance broker, specializes in general liability, workers' compensation, directors/officers insurance, and employment practices liability insurance.
Carmen Effron, president of C.F. Effron Co., a consulting firm in Westport, Conn., said buying DavisBaldwin would be "a smart move" on Wachovia's part "if their focus is on getting the business customer more closely aligned with their insurance practice. The more a bank has to offer to its commercial clients, the better off it's going to be."
She added that clients in time will expect banks to offer commercial insurance solutions.
"They'll see banks as a financial product and services company," Ms. Effron said. "But we have years before that happens."
Banks are trying to add commercial clients because "with a commercial account, there is a plethora of products available, with a nice premium," Ms. Effron said.
Another reason bank purchases of commercial agencies could become a trend, she added, is that personal insurance agents are being marginalized by the Internet and direct sales insurers such as Geico. This is not happening on the commercial side, Ms. Effron said, because transactions with commercial clients in insurance "are more complex."
Ken Kehrer, president of Kenneth Kehrer Associates in Princeton, N.J., said that, while he is generally not a big advocate of insurance-agency purchases by banks, a commercial agency acquisition makes some sense because "unlike with a life insurance agency, a commercial insurance agency has detailed expertise that is hard to find, making it difficult to build up from within."
Wachovia Corp. has nearly 700 branches in Florida, Georgia, North Carolina, South Carolina, and Virginia.