Banks exiting insurance opens door to Gallagher’s growth
Remember when banks were snapping up insurance businesses as another source of revenue?
It’s been a different story lately in the Buffalo Niagara region.
Evans Bank just agreed to sell its Evans Agency subsidiary for $40 million to Arthur J. Gallagher & Co., an insurance brokerage, risk management and consulting firm.
About a year ago, M&T Bank finished selling its M&T Insurance Agency to Gallagher, resulting in a $136 million gain for the bank.
Going back a few years, KeyBank in 2018 sold its Key Insurance & Benefits Services business to USI Insurance Services, recording a $78 million gain from the sale.
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Why are some banks exiting the insurance business? Each has its own reasons. Evans received an offer that it decided was too good to pass up, and will redeploy the proceeds elsewhere. Key had acquired an insurance business as part of its 2016 deal for First Niagara, but insurance wasn’t core to Key’s operations, and the bank found a buyer in USI.
Nationally, Bank Director reported that for the first time in two decades, divestitures of bank-owned insurance brokerages this year have outpaced announced acquisitions.
“The industry as a whole is refocusing its effort on its core business,” said David Nasca, Evans’ president and CEO. “They don’t want to hold capital in ancillary businesses, so they’re monetizing them to be able to refocus…
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