Wells Fargo & Co. (WFC), the largest U.S. home lender, agreed to sell more than 40 percent of its insurance brokerage locations to focus bricks-and-mortar operations on higher-growth regions and bigger clients.
USI Insurance Services will purchase 42 of Wells Fargo's insurance brokerage and consulting offices, according to a statement today from the San Francisco-based lender. The remaining 55 locations are in larger markets that generate more than 90 percent of brokerage revenue, according to Laura Schupbach, head of Wells Fargo Insurance.
Chief Executive Officer John Stumpf, 60, has sought to increase sales at the lender's insurance brokerage business to diversify revenue and strengthen customer ties. Clients who don't have access to standalone insurance offices can still arrange coverage through Wells Fargo bank branches that are served by call centers.
"This is part of a growth strategy," Schupbach said in a telephone interview. "We're trying to get customers into the right channels."
The sale, which is scheduled to be completed in the second quarter, includes six locations in West Virginia and offices in Dayton, Ohio; Boise, Idaho; and Anchorage, Alaska. About 750 of Wells Fargo Insurance's roughly 6,500 employees will be affected, according to Schupbach. USI plans to offer jobs to all staff who are actively working at the brokerages when the ownership changes, according to the statement.
"We look forward to building and expanding in these cities and states," USI CEO Michael Sicard said in a separate statement. USI is focusing on clients in middle markets, according to the statement.
Wells Fargo Insurance, which brokers and consults on property-casualty coverage and employee benefits, will focus on cities including San Francisco, Dallas, Minneapolis and Charlotte, North Carolina. The company expects greater growth in those areas and a bigger opportunity to offer its services to the bank's commercial customers, according to the statement.
Businesses that are served by the brokerages will usually have at least $15 million in annual revenue, a threshold that can change depending on the complexity of the risk, Schupbach said. The division will also help private banking clients with risk management.
USI has expanded through acquisitions as the brokerage industry consolidates. In 2010 the company agreed to buy offices from PNC Financial Services Group Inc. to expand in Kentucky, Missouri and Ohio. A fund run by Goldman Sachs Group Inc. sold Valhalla, New York-based USI to Onex Corp. (OCX), the Canadian buyout firm, in 2012 for $2.3 billion.
Wells Fargo is also shuffling personnel at its brokerage operation, headed by Kevin Kenny. The group will now have three U.S. regional managing directors: Sam Elliott in the West, Pete Gilbertson in the North and Tom Longhta in the South. John Meder will also report to Kenny as chief administrative officer for the brokerages, according to Kathryn Ellis, a spokeswoman for the company.
Wells Fargo's workforce shrank by about 2 percent to 264,900 employees last year. Stumpf cut mortgage-related posts as higher interest rates limited demand for refinancing home loans.