Citi, Wells, BB&T among Likeliest Buyers of Big Insurance Companies

By Winokur, Cheryl | American Banker, March 7, 2000 | Go to article overview

Citi, Wells, BB&T among Likeliest Buyers of Big Insurance Companies


Winokur, Cheryl, American Banker


Who wants to marry an insurance underwriter?

With the passage of the financial services reform law, and more recently ING Group's bid for Aetna, the prospect of banks and insurance companies heading down the aisle takes on a new immediacy.

Notwithstanding the bid for Aetna -- and despite the apparent availability of a number of other large insurers -- most banking companies are hesitating to declare themselves interested in acquiring one. And none has taken the plunge.

But a small number of banking companies -- including Citigroup Inc., Wells Fargo & Co., and BB&T Corp. -- may be more open to the idea. And more could follow if financial stocks rebound or if banks determine that distribution can be improved by buying underwriting capabilities, industry observers and financial services executives said.

The conventional wisdom on banks' buying insurers has swung wildly in the months since the passage of the reform law. Initially, such mergers were touted as one of the likeliest outcomes of the new law. But soon thereafter, as banking companies took stock of their shares' weak standing -- and of insurers' shares' weaker standing -- they lost interest.

"Nothing's happening now," said Sean J. Ryan, an analyst with Byrne, Ryan & Co. in White Plains, N.Y. "Virtually all activity is contingent on a rebound in share prices," he said.

John M. Wepler, vice president of mergers and acquisition services at Marsh Berry & Co. of Concord, Ohio, said, "We don't know of banks other than the gorillas that are interested in acquiring the underwriting component."

Still, it's worth taking a look at some of the gorillas, and others, that might now be mulling making such a play.

For one thing, there are the European players, such as ING, ABN Amro NV, and Amsterdam-based Aegon NV. Industry observers generally see these as the likeliest near-term buyers of U.S. insurance companies partly because such companies already combine banking and insurance. Their expertise makes them better bidders than U.S. banking companies and their size gives them an advantage over many U.S. insurers.

If you're a big European insurer and you want to be in one of the largest insurance markets in the world, "you're going to want to buy U.S. life insurance companies," said Robert A. Lee, an insurance analyst with PaineWebber Inc. of New York.

Outside Europe the pickings get slimmer.

One obvious possibility is Citigroup, said Mr. Ryan of Byrne, Ryan. "You may not actually need a dramatic move in the stocks to make Citi a plausible near-term buyer. But for the rest of the woeful bank industry, you're going to have to wait and see," he said.

Raphael Soifer, a former banking analyst with Brown Brothers Harriman & Co. in New York, agreed that Citigroup is in a different position than any other U.S. banking company. That's because Citigroup already owns a large life insurance company and a property casualty insurer and anything they were to buy could be folded into those holdings.

"I think there's every chance in the world, given the right price and the right situation, that Citi will be buying insurance companies," Mr. Soifer said, adding that it would have to be large in order to be worth the company's effort.

A spokeswoman for Citigroup did not return calls seeking comment.

Meanwhile, a spokesman for Wells Fargo said the company would be interested in buying an insurer only if doing so increased its distribution capabilities.

"We do not have an immediate need to acquire a large insurance company but we continue to explore opportunities that first of all would benefit our shareholders and second, enable us to expand our distribution network for selling insurance products," he said. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Citi, Wells, BB&T among Likeliest Buyers of Big Insurance Companies
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.