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USI Insurance Services to acquire Wells Fargo’s insurance brokerage

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USI Insurance Services L.L.C., Valhalla, New York, has entered an agreement with Wells Fargo & Co. to purchase Wells Fargo Insurance Services USA Inc., the companies announced Tuesday.

Terms of the deal, which is expected to close in the fourth quarter, were not disclosed. Both firms have brokerage revenues of about $1 billion, according to Business Insurance’s latest ranking of the Top 100 brokers of U.S. business, so the deal will roughly double the size of USI.

Tim Prichard, head of Wells Fargo Insurance Services USA Inc. will join USI as part of the deal.

The purchase will include Wells Fargo’s insurance brokerage and consulting, employee benefits and property/casualty national practices, as well as its Safehold Special Risk Inc., small business insurance, student insurance, individual health and private risk management insurance business lines, USI said in a statement.

Michael J. Sicard, chairman and CEO of USI Insurance Services, said the deal was “transformational” for both brokers.

“From my perspective, this is a merger. It really is a partnership between USI and Wells Fargo Insurance Services,” Mr. Sicard said in an interview with Business Insurance. “We have a long history and insight into Wells Fargo Insurance Services.”

USI, which was purchased by private equity firm Kohlberg Kravis Roberts & Co. L.P. and Montreal-based Caisse de dépôt et placement du Québec for $4.3 billion in March, bought 42 Wells Fargo Insurance offices in 2014.

Wells Fargo had been rumored to be selling its insurance brokerage business, which is one of the largest bank-owned brokers, for the past several months.

“For Wells Fargo Insurance, we went through, earlier this year, a strategic review of the insurance business and it was determined that we would go out to the market and engage with a potential partner and see if there was a desire to move forward,” Mr. Prichard said.

The 2014 sale of Wells Fargo offices helped secure the later deal, he said.

“When you go through a transaction like we did with the 42 offices in 2014, you get to know someone fairly well in that process,” Mr. Prichard said.  “What came out of that was an appreciation for how USI handled team members moving forward and how they served our clients.”

The acquisition is a major move in the insurance brokerage sector, said Timothy J. Cunningham, managing director of Optis Partners L.L.C. in Chicago.

“The deal clearly falls into the blockbuster category. This roughly doubles USI’s size,” he said.

“Once it became know it was in play, things moved pretty quickly,” he said, adding that banking regulations provide rigorous protocols to be followed when selling a business.

“I think (Wells’) objective was probably to sell it as quickly as possible and get it to a buyer that could quickly integrate it,” Mr. Cunningham said.

USI has a long history of successfully integrating acquisitions, he said.

“It’s going to take a lot of work and they are probably the best ones to make it happen,” he said.