BB&T buys Canadian-based CAFO Inc. (August 24, 2006)

BB&T Corporation (NYSE: BBT), a principal subsidiary of Branch Banking and Trust Company, has agreed to buy insurance premium finance company AFCO Credit Corporation and its Canadian affiliate, CAFO Inc., from Mellon Financial Corporation (NYSE: MEL).
Terms of the transaction were not disclosed. The agreement is subject to regulatory approval and is expected to be completed during 2007 Q1.
CAFO offices are located in Edmonton, Montreal and Toronto.
“This acquisition is consistent with our announced strategy to add high-quality, well-managed specialized lending businesses,” BB&T chairman and CEO John Allison said in a press release. “Partnering with the very experienced professionals at AFCO and CAFO will significantly strengthen our insurance premium finance franchise in the United States, as well as provide entry into Canada – a first for BB&T.”
Insurance premium financing refers to a loan that enables businesses and consumers to pay their insurance costs over time, improving cash flow and providing additional credit and working capital.
The acquisition would move BB&T from the ninth to second-largest provider of insurance premium financing in the United States and the largest in Canada.
BB&T already operates insurance premium finance subsidiary Prime Rate Premium Finance Corporation Inc. AFCO and CAFO would operate separately from Prime Rate using their existing brand names as a unit of BB&T’s Specialized Lending Division.
“AFCO is a firm with a premier brand and more than a half-century of experience in making loans to finance property and casualty insurance premiums,” Clarke Starnes, BB&T’s manager of Specialized Lending, said in a release. “That’s as long as the industry has been around.”