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SAN FRANCISCORather than be integrated into Wells Fargo Insurance Services Inc., ABD Insurance & Financial Services Inc. will operate as a separate division of the larger brokerage after completion of their banking parents' merger later this year, according to WFIS' top executive.
"We both recognize that our businesses are different and it's better to operate in different ways," said Dave Zuercher, president and chief executive officer of Chicago-based WFIS.
"When the acquisition is closed, it will be business as usual. (ABD's) name will remain the same and ABD's offices will continue to function as they have in the same locations. Customers will be served by the same people they deal with today," he said.
Questions about a successful integration of WFIS, for the most part a middle-market commission-based general brokerage, and ABD, generally a larger-account fee-based specialty brokerage, arose shortly after Wells Fargo & Co. said it was acquiring ABD's parent, Greater Bay Bancorp, in a $1.5 billion all-stock transaction. Not only did observers question how the disparate brokerages would come together, given the deal was struck between their parents and not the brokerages themselves, but issues of morale also were raised after ABD's CEO Dan R. Francis resigned only days after the deal was announced (BI, May 14).
Last week, Greater Bay Bancorp announced that Samuel L. Jones, who left ABD in late 2005 to pursue other interests, had rejoined the brokerage to replace Mr. Francis as president and CEO. Mr. Jones was formerly president of ABD's property/casualty operations.
Bruce M. Basso and Fred de Grosz, who assumed executive leadership of ABD after Mr. Francis' departure, remain chairmen of the brokerage.
As far as ABD's attitude toward the merger, Mr. Zuercher said he has had one-on-one meetings with about 50 ABD employees so far and describes morale at the Redwood City, Calif.-based brokerage as "good."
"There's always concern in this kind of situation," he said, but "the people I've talked to see the benefits of ABD being part of Wells Fargo's business strategy."
In a statement, Mr. Jones said he is "enthusiastic" about rejoining ABD during what he described as a "particularly exciting time in ABD's history."
"The impending merger with Wells Fargo will enable ABD to grow its business units, enhance our service commitments and create job opportunity and satisfaction while maintaining the ABD culture, which has served our customers so well over time," he said.
ABD executives were unavailable for comment last week.
For WFIS, which changed its name from Acordia Inc. in February, "we're going to have more capabilities to sell more sophisticated services to Wells Fargo customers and be able to reach markets such as technology and agriculture, which we have not necessarily penetrated to the extent that we should in the past," Mr. Zuercher said.
While new bank parent Wells Fargo will be implementing its cross-sell model in ABD once the deal is closed, and WFIS and ABD will work together as a brokerage team, ABD will remain a separate division, he said.
"The acquisition of ABD is about the customer," Mr. Zuercher said. "At the present time and for the foreseeable future, the customers of ABD are very happy with ABD's culture and with ABD's business practices, so there is no reason to change that."
Observers say that given the nature of the deal, keeping the brokerages separate makes sense.
"It appears Wells is following the physician's adage of 'doing no harm,' particularly when there is no evidence of illness," said John Wicher of John Wicher & Associates Inc. in San Francisco. "Wells Fargo's target was Greater Bay Bancorp, not ABD, which may not have been a strategic priority" for WFIS.
"Certainly, it's a realistic structure given the fact that insurance was second to the core banking transaction," said Timothy J. Cunningham, a principal with OPTIS Partners L.L.C. in Chicago. Additionally, "it appears that Wells Fargo has a culture of taking a relatively soft hand in transitioning (acquired firms) into a structure that ultimately makes sense, which is evidenced by the way it integrated Acordia," he said.
Shortly after Wells Fargo's 2001 acquisition of the Chicago-based brokerage, it moved Acordia to St. Louis Park, Minn., and began the process of integrating it into the bank's existing insurance operation and changing Acordia's name. But after operating for nearly six months as a subsidiary of Wells Fargo Insurance, Acordia moved back to Chicago, reclaimed its name and became a wholly owned subsidiary of the banking giant. It wasn't until February, nearly six years later, that Acordia officially changed its name to Wells Fargo Insurance Services and the existing insurance operations began to meld togethera move Mr. Zuercher said was driven by customers and Acordia employees.
"While each business combination is different, we learned a lot from the integration of Acordia and many other business combinations with Wells Fargo that can be applied in this case," Mr. Zuercher said.