With an aim to further expand its insurance operation, BB&T Corporation (BBT - Free Report) through its wholly owned subsidiary, BB&T Insurance Holdings, Inc. announced a deal to acquire Regions Insurance Group. The financial terms of the transaction were not disclosed. Notably, Regions Insurance Group is a subsidiary of Regions Financial Corporation (RF - Free Report) .
The deal, expected to close in third-quarter 2018, is still subject to regulatory approval and customary closing conditions.
For Regions, the deal in sync with its ongoing initiative to simplify and streamline operations.
Benefits & Other Details
Regions Insurance, providing property and casualty insurance and employee benefits products, serves more than 60,000 clients across the Southeast, Texas and Indiana through its 30 offices.
The transaction will further strengthen BB&T’s wholesale and retail insurance channels. Following the closure of the deal, the company expects nearly 50% of insurance brokerage revenues to come from BB&T Insurance's retail network. Additionally, the company’s annual insurance brokerage revenues will likely increase to roughly $2 billion.
BB&T's chairman and CEO, Kelly S. King said, “Regions Insurance significantly adds to our retail insurance network providing us the opportunity to further build out our footprint in core BB&T markets across the Southeast.”
Further, the deal strengthens BB&T’s position as the 5th largest insurance broker in the United States and globally.
As part of the deal, the president and CEO of Regions Insurance, Rick Ulmer as well as other associates will join BB&T Insurance’s senior leadership and other positions.
With BB&T having a proven track record of successfully integrating acquired businesses, this insurance transaction will improve the company’s top-line growth. Nonetheless, the capital required to purchase the unit will impact the company’s 2018 Comprehensive Capital Analysis and Review (CCAR).
Notably, Regions intends to use the capital generated from this deal to buy back additional shares, subject to the review and approval of the Fed as part of 2018 CCAR.
BB&T plans to further expand its footprint in Texas and Pennsylvania through acquisitions, with key focus to increase revenues from insurance operations. So, this transaction is in line with its strategic initiatives that will support bottom-line growth.
This Zacks Rank #3 (Hold) stock has gained 7.2% over the past six months, outperforming the industry’s growth of 3.3%.
Stocks Worth a Look
Major bank stocks worth considering include Fifth Third Bancorp (FITB - Free Report) and M&T Bank Corporation (MTB - Free Report) . Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fifth Third Bancorp’s current-year earnings estimates have moved 1.3% upward over the last 30 days. The company’s shares have gained 10% over the past six months.
Current-year earnings estimates of M&T Bank have been revised nearly 1% upward for the last 30 days. Further, over the past six months, the company’s shares have rallied 11.4%.
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