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Top insurance brokers: Wells Fargo Insurance Services USA Inc.

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Top insurance brokers: Wells Fargo Insurance Services USA Inc.

Wells Fargo Insurance Services USA Inc. saw its brokerage revenue de-cline last year despite higher gross revenue, as it focused on organic growth and cross-selling insurance to its parent company's banking customers while also divesting portions of its business.

Chicago-based Wells Fargo Insurance represents about 2% of Wells Fargo & Co.'s total revenue, but the unit plays a central role in the bank's push to be a “coast-to-coast, full financial services provider focused on what the customer needs,” said Marty Mosby, Memphis, Tennessee-based equity analyst at Vining Sparks IBG L.P.

Wells Fargo averages “six (financial) products per customer right now, and they want to drive toward 10 or more,” Mr. Mosby said, adding that the bank has “been one of the better banks at being able to ... cross-sell more products and be a broader provider of financial services.”

The brokerage unit increased its gross revenue by 3.8% in 2014 to $1.55 billion, and saw organic growth in the “mid-single digits,” said Laura Schupbach, its San Francisco-based executive vice president and head.

Yet even with a 3.8% decline in brokerage revenue to $1.30 billion in 2014, Wells Fargo Insurance — the only member of the world's top 10 to post a year-over-year decline — retained its No. 8 position in the 2015 Business Insurance ranking of the world's largest brokers.

As in the past, Wells Fargo Insurance's “biggest strategy” for growth continues to be “introducing existing Wells Fargo (banking) clients to our insurance capabilities,” Ms. Schupbach said.

To do that, the broker in recent months hired about 50 executives in its individual and small-business segment and its middle-market brokerage and consulting business.

They include business development officers to be “liaisons between the insurance business and some of our core banking businesses,” Ms. Schupbach said.

Wells Fargo also has lured talent from top competitors such as Aon P.L.C., Marsh L.L.C. and USI Insurance Services L.L.C. for senior management positions. In March, Wells Fargo hired former Aon executive Kristine Meuse as national head of cross-sell. In April, it hired David Karr, formerly with Marsh, as its casualty practice leader.

We've been investing “across the board” in “leadership and client-facing people (and) technical resources,” Ms. Schupbach said.

In the past year, Wells Fargo Insurance has continued to reposition its business segments and divest “nonstrategic pieces” of the portfolio, Ms. Schupbach said.

The broker is adjusting its business model, shifting small business clients to its personal and small-business insurance segment and is “moving upmarket” to larger clients in its brokerage and consulting side, Ms. Schupbach said.

“Our segmentation approach will allow us to help that small employer grow as we provide many of the financial services that they need to kind of round out their business,” said Tim Prichard, The Woodlands, Texas-based head of employee benefits with Wells Fargo Insurance. That approach is “different than many of our competitors out there, (who) have been exiting the small and individual space.”

Ms. Schupbach said the broker also is organizing around industry segments, such as health care, “where we think we have a real specialty and an expertise.”

In addition to introducing banking clients to insurance products, Wells Fargo Insurance is working to sell more insurance to its current customers, such as benefits consulting, she said.

Challenges in 2014 that limited its brokerage revenue were due to declining commodities prices, which led to a decrease in revenue in the firm's crop insurance underwriting business, and a “large portfolio of runoff consumer business,” Ms. Schupbach said.

Mr. Mosby said the decline also could result from a shift in how much insurance Wells Fargo underwrites.

“Some of the riskier pieces of business I wouldn't be surprised that they were pushing out to third parties,” he said.

Divestments include the 2014 sale to USI of 40 smaller regional brokerage locations and its 2013 exit of the wholesale brokerage industry with its sale of American E&S Insurance Brokers to R-T Specialty L.L.C., which is part of Chicago-based Ryan Specialty Group L.L.C.

Though Wells Fargo Insurance is not actively looking for acquisitions, they are not out of the question “if we see something that fits with our strategy,” Ms. Schupbach said.

“We have leaders in place that are there from a technology and a cutting-edge mindset to be able to adapt to changing customer needs, which is coming,” Mr. Prichard said.

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