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Wachovia insurance-unit workers speculate about possibility of sale
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Published: August 29, 2008
CHARLOTTE - As Wachovia Corp. considers the sale of "noncore" assets to raise capital, employees inside the bank's insurance unit are wondering if that business could be on the block.
Sources said that speculation has mounted inside the division since chief executive Bob Steel said last month that the Charlotte bank would consider selling unspecified assets. Weighed down by rising loan losses, Wachovia is trying to raise cash and cut costs after reporting a $9.1 billion second-quarter loss.
Analysts have frequently cited the Wachovia Securities stock- broker unit and the Evergreen asset-management arm as top candidates that could be shed. But Wachovia has said that the brokerage is not for sale and has called Evergreen "core" to the company, citing its strong synergies with other business lines.
Bank spokeswoman Christy Phillips-Brown declined to comment this week on specific businesses that could be sold.
Wachovia Insurance Services is an insurance brokerage that offers property-casualty insurance, risk-management consulting, employee-benefits and compensation consulting, life insurance, and executive benefits to clients nationwide. It has 1,300 insurance employees in 34 offices throughout 15 states and the District of Columbia, according to the bank's Web site.
The business has been built through internal growth and acquisitions, including the 2005 purchase of Palmer & Cay Inc. of Savannah, Ga.
Wachovia was the nation's 12th-biggest insurance brokerage in 2007 with $422.5 million in revenue, down from No. 11 the previous year, according to Business Insurance magazine. It trailed far behind No. 1 Marsh & McLennan Cos. Inc., which had $5.5 billion in revenue.
Kevin Fitzsimmons, an analyst with Sandler O'Neill + Partners, said that the company is likely analyzing a number of possible asset sales, looking at the capital that businesses use, the profits they generate and the price they could bring.
"Anything that can be carved out and not necessarily viewed as core to the retail/commercial bank is potentially fair game," Fitzsimmons said. "I think at this point, we can assume there are a number of businesses on the table."
Wall Street likely will give Steel until the end of the year to detail his plans unless profits slump further, Fitzsimmons said.
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