Leading Brokers 2007: Wells Fargo Insurance Services Inc.Reprints
Wells Fargo Insurance Services Inc. expanded its capabilities and revenues over the past year, but questions linger over whether its strategy of cross-selling insurance to bank customers will succeed with large, complex commercial accounts.
Brokerage revenues for the world's fifth-largest broker grew to $1.01 billion in 2006, up 4.8% compared with 2005. The broker said that two-thirds of its 2006 growth was organic, with the remainder from acquisitions.
Its revenues will increase further in 2007 if WFIS' acquisition of ABD Insurance & Financial Services Inc. goes through as planned. Based on 2006 revenues, the purchase of ABD would add $164 million to WFIS.
The organic growth rate, which compares favorably with other brokerages, was due to several reasons, said Dave Zuercher, president and chief executive officer of Chicago-based WFIS. Mr. Zuercher became president and CEO of WFIS in August 2006 after serving as chairman of Acordia for five years. He succeeded Peter J. Wissinger, a 20-year Wells Fargo veteran who sought a career change after serving at the helm for just eight months.
Market conditions in 2006 also helped WFIS' revenues. The broker was very active in Florida and other states in the Southeast where property rates shot up following the hurricane losses of 2005, Mr. Zuercher said.
WFIS' bank parent, Wells Fargo & Co., focuses on cross-selling insurance to its existing bank clients rather than acquiring to expand its overall customer base.
Wells Fargo acquired Acordia in 2001 and changed the name to WFIS this February. In May 2006, while still under the name of Acordia, for example, the company established a gaming practice group in Las Vegas "as a national resource for Wells Fargo and Acordia customers and sales professionals."
The group was launched to provide risk management and insurance purchasing services for casinos, riverboats, Indian gaming and "racinos"--a combination of race tracks and casinos.
This year's purchase of Redwood City, Calif.-based ABD, which will operate as a separate unit, should help WFIS expand its risk management practice, said Mr. Zuercher.
Like several other brokers that place business for midsize and small businesses, WFIS continues to accept payments from insurers. The brokerage reports that contingent or supplemental commissions accounted for 2% of its revenues.