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BB&T Corp.'s acquisition of the North American brokerage business of Cooper Gay Swett & Crawford Ltd. is expected to add more than $200 million in revenue annually to BB&T Insurance Holdings Inc. and diversify its business, BB&T said.
The deal announced Wednesday excludes Swett & Crawford's non-U.S. business, which accounts for less than 5% of its total revenue, BB&T said in a statement.
“Swett & Crawford nicely enhances our insurance business and increases and diversifies our overall fee income profile,” Kelly S. King, BB&T's Winston-Salem, North Carolina-based chairman and CEO, said in a statement.
The deal announced Wednesday, which is subject to regulatory approval, is expected to close in the first half of this year, BB&T said.
With $200 million in revenue and a $500 million price tag, the deal “appears to have gone for a market price,” Timothy J. Cunningham, managing director at Chicago-based investment banking and consulting firm Optis Partners L.L.C., said Thursday.
The deal will “likely have some strategic value,” he said.
“We have admired the Swett & Crawford business model for many years,” John Howard, chairman and CEO of BB&T Insurance, said in the 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.”
“Swett and Crawford is a wonderful company with many very talented employees. Our cultures are well-aligned,” Mr. Howard said Thursday in an email. “We are both focused on providing exceptional service to our clients.”
BB&T Insurance already is the largest broker with wholesale business, according to the latest Business Insurance ranking.
“Swett and Crawford is a wonderful company with many very talented employees," Mr Howard said. Our cultures are well aligned. We are both focused on providing exceptional service to our clients. Through this transaction, we will be able to remove obstacles, eliminate distractions, and provide resources to support continued growth.”
In announcing the $500 million cash deal Wednesday, Cooper Gay, Group CEO Steve Hearn said the proceeds would allow Cooper Gay to “transform our business” and “build for the future with a fresh outlook.”
“The sale agreement is credit positive for Cooper Gay,” Bruce Ballentine, vice president and senior credit officer at Moody's Investors Service Inc. in New York, said Thursday.
The deal consists of U.S. wholesale insurance brokerage operations, specialty managing general agencies that include J.H. Blades & Co. and U.S. reinsurance brokerage business, Cooper Gay said. However, the deal excludes Creechurch International Underwriters, a specialty managing general agent that operates in Canada.
Reinsurance brokerage Cooper Gay Swett & Crawford Ltd. said Friday that it plans to sell its North American business, including U.S. wholesale brokerage Swett & Crawford with which it merged five years ago.