BB&T Corporation has reached an agreement to acquire CGSC North America Holdings Corporation (Swett & Crawford) from Cooper Gay Swett & Crawford (CGSC) for US$500 million in cash, a move expected to provide BB&T’s wholesale insurance business with scale and increase annual insurance revenue by 15%.
BB&T reported Wednesday that the acquisition – which is subject to regulatory approval and scheduled to close in the first half of 2016 – is expected to improve insurance revenue contribution from 15% to approximately 17%.
In addition, it is thought the move will add more than $200 million in annual revenue to BB&T Insurance, notes a statement from BB&T, one of the largest financial services holding companies in the U.S. that offers a full range of consumer and commercial banking, securities brokerage, asset management, mortgage and insurance products and services.
“BB&T expects to record approximately $500 million of goodwill and intangibles as a result of this acquisition,” the company reports. “This transaction excludes Swett & Crawford’s non-U.S. business, which accounts for less than five percent of its total revenue,” the statement adds.
A wholesale insurance broker in the United States, Swett & Crawford has served the commercial insurance marketplace for more than 100 years. It consists of U.S. wholesale insurance brokerage operations, specialty managing general agencies, including J.H. Blades & Co, and a U.S. reinsurance brokerage.
The specialty managing general agent, Creechurch International Underwriters, which operates in Canada, is not included in the sale, notes a statement from GCSC.
BB&T’s current wholesale insurance operations include property and casualty broker and managing general agent CRC Insurance Services, Crump Life Insurance Services and managing general underwriter AmRisc.
“Swett & Crawford nicely enhances our insurance business and increases and diversifies our overall fee income profile,” Kelly S. King, BB&T’s chairman and CEO, says in the BB&T statement.
“This represents a compelling opportunity to further build BB&T Insurance with the addition of a world-class company with a strong and talented team of industry specialists,” John Howard, chairman and CEO of BB&T Insurance, goes on to say.
“Following an exhaustive process, which has generated significant interest from potential acquirers, BB&T has made a compelling offer which the Group board believe represents a transaction to the benefit of all parties, including clients and employees of Swett & Crawford,” Group CEO Steve Hearn says in the GCSC statement.
“The proceeds of the sale will provide us with the resources to transform our business,” notes Hearn, enabling the company “to build for the future with a fresh outlook” and move on to the next phase of its development.
With tools at its disposal and a strategy, “together, this will enable us to build a business, centred on innovation, expertise and service, which is fit to challenge established markets and that will become a leading force in our chosen sectors,” he adds.