With the strategy to focus on core Wholesale Banking operations, SunTrust Banks, Inc. (STI - Free Report) announced an agreement to divest its commercial lines insurance premium finance subsidiary, Premium Assignment Corporation (“PAC”) to Kansas City, MO-based IPFS Corporation. The financial details of the deal, expected to close in fourth-quarter 2017, were not revealed.
Hugh S. (Beau) Cummins, III, Wholesale Segment executive at SunTrust said, “PAC has demonstrated good growth and profitability, and has been led by a successful management team. This transaction aligns PAC with a company that has a proven track record in the insurance sector, and one that will hire all PAC teammates.”
Notably, the transaction is still subject to several customary closing conditions. As of Jun 30, 2017, PAC had $1.4 billion in assets and finances commercial lines insurance premiums in all the states. SunTrust had acquired PAC as part of its deal to buy Regional Investment Corporation in 1994.
SunTrust intends to improve profitability for focusing on Wholesale Banking business. Also, the company is continuing with its loan portfolio diversification plan to increase commercial real estate and commercial and industrial loans.
Several major banks including Bank of America Corporation (BAC - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and Citigroup Inc. (C - Free Report) have been undertaking measures to strengthen core operations and have divested/closed several non-core businesses. These measures significantly boost profitability and enhance shareholders’ value.
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