Associated Banc-Corp ASB has completed the sale of the insurance business, Associated Benefits & Risk Consulting, to USI Insurance Services LLC for $265.8 million in cash. The deal was announced in May.
Being a multi-line insurance agency with 400 employees, Associated Benefits & Risk Consulting provides employee benefits, retirement plans, compliance, business insurance, risk management and individual insurance solutions.
Associated Banc-Corp is likely to record a pre-tax book gain of $165 million related to the sale in second-quarter 2020.
At the time of announcing the transaction, the company had expected that this would strengthen the capital base and lead to an increase in tangible common equity by $210 million. It will lower $99 million of goodwill and other intangible assets. Also, the bank’s pro-forma efficiency ratio is projected to decline 1%.
Headquartered in Valhalla, NY, USI Insurance Services is one of the largest insurance brokerage and consulting firms in the world. It delivers property and casualty, employee benefits, personal risk, program and retirement solutions to large risk management clients, middle market companies, smaller firms and individuals.
At the time of announcing the deal, Associated Banc-Corp’s president and CEO, Philip B. Flynn, had stated, “This transaction allows us to monetize our investment in ABRC and further our strategic goals of enhancing shareholder value and being a source of strength for our customers, colleagues and communities.”
He had further added “The capital provided from this transaction will support loan growth, create an added buffer during these trying economic times, and support our dividend policy.”
Associated Banc-Corp’s business restructuring strategies are expected to support financials. However, lower interest rates will likely continue to put pressure on net interest margin, in turn hurting revenue growth to some extent.
Shares of Associated Banc-Corp have lost 38% so far this year compared with a 31.6% decline recorded by the industry.
Currently, Associated Banc-Corp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
There has been a rise in restructuring activities in the finance sector. Last month, Wells Fargo Investment Institute, Inc., the registered investment advisor and wholly-owned subsidiary of Wells Fargo WFC, announced a deal to sell the Global Alternative Investments Feeder Fund Platform to iCapital Network, in an effort to simplify operations and provide innovative products to the bank’s clients.
Affiliated Managers AMG announced that it will be a minority equity partner to the recently founded San Francisco-based independent investment firm, Inclusive Capital Partners. Meanwhile, Charles Schwab SCHW acquired Motif’s technology and intellectual property assets with an aim of bolstering existing capabilities, along with speeding up the development of thematic and direct indexing solutions for its retail investors, as well as RIA clients.
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