Magazine article American Banker

Wells Fargo Buys Flatiron to Beef Up in Insurance

Magazine article American Banker

Wells Fargo Buys Flatiron to Beef Up in Insurance

Article excerpt

Wells Fargo & Co. bought Flatiron Credit Co. Inc. on Thursday, a move the San Francisco banking company said will bolster its growing insurance division and let it enter the premium-finance business.

The $595 billion-asset Wells bought the Denver company from Toronto-Dominion Bank's TD Banknorth Inc. of Portland, Maine. Flatiron has about 60 employees and a $300 million loan portfolio. The deal's terms were not disclosed.

David Zuercher, the head of international and insurance services at Wells, said in an interview that the deal was part of the company's continuing effort to expand its insurance business. He said Wells views insurance as an important way to attract customers and boost cross-selling, which has long been a hallmark of the company's growth strategy.

He said insurance premium financing is a steady business that should grow along with its insurance division. Wells spent much of 2007 expanding its insurance line through acquisitions. The company owns the fifth-largest insurance brokerage in the United States.

"We see demand for" insurance premium financing "growing, mainly because we see our insurance business growing," Mr. Zuercher said.

Flatiron, which will keep its name and main office in Denver, lends primarily to small and midsize businesses that essentially need short-term loans to buy insurance. Its loans are typically for less than $500,000. The interest generated on such loans has proved profitable, Mr. Zuercher said.

But insurance premium financing comes with some risk - namely that clients might be low on reserves and struggle to keep up their payments. …

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