Associated to Sell Insurance Arm to USI

Associated Bank is to sell its insurance and consulting arm to USI Insurance Services in a deal worth $265 million, it announced this week.

The subsidiary, Associated Benefits & Risk Consulting (ABRC), provides employee benefits, retirement plans, compliance, business insurance, risk management and individual insurance solutions.

Philip Flynn, president and CEO of Associated, said the sale would “further our strategic goals of enhancing shareholder value and being a source of strength for our customers, colleagues and communities”.

He added that there was a “meaningful difference” in valuation between regional banks and insurance brokers that was not reflected in Associated Bank’s share price.

“In addition, the capital provided from this transaction will support loan growth, create an added buffer during these trying economic times, and support our dividend policy,” Flynn said.

Michael Sicard, chairman and CEO of New York-based USI, said the acquisition of ABRC “complements USI’s strong focus on building long-term client relationships”.

The deal is subject to customary closing conditions including regulatory approvals, Associated said. Should it clear these hurdles, the transaction is expected to close  “late in the second quarter or early in the third quarter of 2020”, the bank said.

Elsewhere, Firefly Credit Union and TruStone Financial have announced plans to merge.

Following the planned merger, the combined entity would have more than $3 billion in assets and would trade under the TruStone Financial brand, the companies said in a joint statement.

Together, Firefly and TruStone cater for more than 190,000 members across 23 locations in Minnesota and Wisconsin. The combined organization would become the second largest credit union in Minnesota, the companies said, as well as one of the top 100 in the US.

Dale Turner, president and CEO of Firefly, said the merger would “provide a tremendous amount of value to our members, more opportunity for our employees, and would allow us to make a bigger impact on the communities we serve”.

Tim Bosiacki, CEO of TruStone Financial, added: “This merger is a true strategic partnership, one highlighted by the fact that we’re working collaboratively to determine best practices for the combined organization.

“Together we would increase our presence across Minnesota and southeast Wisconsin resulting in more access for our combined membership.  Simply put, this merger is a win-win.” 

Turner will take over as president and CEO of the new organization, while Bosiacki will retire upon completion of the merger.

The deal is subject to regulatory approval and a member vote.

Separately, United Bank has completed its $1.1 billion acquisition of Carolina Financial Corporation and its subsidiary CresCom Bank.

Following the transaction, United has $25 billion in assets and 230 offices across West Virginia, Virginia, Ohio, Pennsylvania, Maryland, North Carolina, South Carolina, Georgia, and Washington, DC.

The deal, first announced in November 2019, follows a period of growth for United Bank through merger and acquisition activity over the past few years, more than doubling the group’s size.

It bought Virginia Commerce Bank in 2014, followed by Bank of Georgetown in 2016. It acquired Cardinal Financial Corporation in 2017.

Richard Adams, chairman and CEO of United, said the company had been seeking to expand its footprint in the south-east of the US.

“This transaction marks the 32nd acquisition of the current administration and expands our presence in some of the most desirable banking markets in the nation,” he said.

“The merger brings together two of the best performing banking companies in the country, and uniquely positions our franchise as one of the most valuable regional banking companies in the Southeast and Mid-Atlantic.”