MARKETING

BANKS ACQUIRING AGENCIES

Three different agencies; three different stories

By Dennis Pillsbury

Recently, banks acquired three agencies that had been recognized as Rough Notes Marketing Agencies of the Month. We decided to talk to the top dogs at each of the agencies to find out what prompted the move. Not surprisingly, we got three different reasons.

Top Five in Five

Wachovia Corp. acquired Cameron M. Harris & Co. (Marketing Agency of the Month in March of 1999) on September 4, 2002. The agency, which has offices in Charlotte and Raleigh in North Carolina, and in Columbia, South Carolina, ranks in the top 50 brokers in the United States with $27 million in revenues. Wachovia, with assets of $325 billion, is the fourth largest bank in the United States. Its Wachovia Insurance Services has been expanding rapidly through acquisition. In 1999, it acquired Barry, Evans, Josephs & Snipes. The following year, it purchased DavisBaldwin and The Tribus Cos. And in 2001, it bought Hamilton Dorsey Alston and the assets of Crawford, Slevin & Hicks. The projected year-end combined revenues of Wachovia Insurance Services are expected to be approximately $150 million, ranking it among the top 15 insurance brokers. It provides financial services in 11 states along the East Coast.

Cameron (Cammie) Harris said he sold because he wanted to "fulfill a dream to build a national broker. I'm very excited about this opportunity. Wachovia is a good organization. I've known the chairman, Ken Thompson, for years. His philosophy matches my own. We've always focused on 'growth through excellence' and that is the way Wachovia wants to grow as well. They purchased great agencies throughout the East Coast. I knew several of them very well through my former partnership in Assurex."

Cammie continues: "We need to establish the brand of Wachovia Insurance Services as quickly as possible. We will continue to operate as Cameron M. Harris & Co. for the next two years but, as far as I'm concerned, the sooner we change the name, the better. This really represents a marvelous opportunity to build something the right way. And we'll have the bank's financial power behind us."

John Hamilton of Hamilton Dorsey Alston (HDA), Atlanta, Georgia, adds that the experience with Wachovia has been "positive overall." HDA was acquired by Wachovia in May of 2001. "It's allowed us to create a more holistic approach to financial services for our clients. We're still trying to get our arms around the enterprise risk management (ERM) concept and integrate financial and other risks with the more traditional insurance risks, but we certainly see that as an important idea that needs to be brought to our commercial clients."

He continues by pointing out that "there have been some adjustments. We weren't used to the need to tell someone what we're doing. It's mostly a matter of developing new communication habits. We're trying to integrate different cultures and technology systems and that means meetings which require some of our time. We're in the process of developing an overall technology master plan. Agencies within the Wachovia Insurance Services group are on different systems so we're working through that."

He concludes, "Overall, I'm still very excited. We have a great deal of bench strength and it's opened up a lot of opportunities. We're 18 months into it and if I had to do it all over again, I would."

Keeping control

Over the past couple of years, The Addis Group, King of Prussia, Pennsylvania (Marketing Agency of the Month in August of 1999), received a number of calls from potential acquisitors. Scott Addis responded by asking John Wepler of Marsh Berry to pre-screen all potential suitors through a set of stringent criteria. The number one requirement on the hit parade was control. When John first saw the criteria, he told Scott that he felt no one would ever agree to buy the agency under those terms, but he agreed to perform the pre-screening. So, as the calls came in, Scott referred them to John and continued to do business as usual--until a call came from Susquehanna Bancshares, Inc., Lititz, Pennsylvania.

Susquehanna met all the criteria.

Susquehanna is a bank holding company that owns nine community banks with more than 150 branches, two leasing companies, a trust and investment company, and an asset management company. It has assets of more than $5 billion. Addis was to be its entrée into the insurance business.

One of the things that made Susquehanna unique was its history of non-interference and its openness.

"I remember receiving a call from a significant-sized financial institution in 1999. After a few meetings with the bank's foundation insurance agency, I asked to meet with the financial institution's president and CEO," Scott says. "Their response, basically, was, 'Why would he want to meet with you?' I realized then I would have little or no control over the Addis Group's destiny.

"With Susquehanna, it was completely the opposite. Not only did I share strategies with the president and CEO, but I also met with the management teams of a number of bank-owned affiliates. They all said the same thing: 'The decision-making would be left to us.' Each of the community banks also kept their names because Susquehanna recognized the values of community banking and how important the name and service-orientation are to the people in the communities those banks serve. We were taken with the quality and integrity of Susquehanna's management team as well as its passion for customer service. We felt it matched our own."

Another strong positive factor was the fact that it was Susquehanna's first acquisition in the insurance field, which meant "we would serve as the foundation for Susquehanna's future in the insurance industry," Scott says.

William J. Reuter, Susquehanna president and CEO, said they had been looking for five years for the "right management team to lead our efforts in the area of insurance and risk management." Just as Susquehanna met all of Addis's criteria, Reuter noted, "The Addis Group met all of our criteria including leadership that:

* Builds long-term professional relationships with its clients

* Has gained the respect of its insurance carriers

* Is committed to long-term relationships

* Exhibits a consistent history of building and maintaining an organization that values and develops managerial talent and knowledgeable service-oriented staff

* Wants to continually learn and expand

* Has the ability and desire to train, coach and mentor other associates within our organization."

The Addis Group continues to have its own board of directors, with Susquehanna's CEO and its COO serving on the seven-member board.

Scott concludes that it was "the benefits to our staff that really became the driving force. There is no change regarding our clients, but becoming part of a 2,500-employee organization opens up enormous opportunities for our staff. It will also make it easier for us to continue to attract the gifted people that make up our current personnel and provide them with growth opportunities."

The only pockets deep enough

When Dick Taylor wrapped up his work with the Olympics in Salt Lake City, he headed back to his agency--Grant-Hatch & Associates, Inc. (Marketing Agency of the Month in September of 1990), and realized, "I was ready to retire." Dick is a very vigorous 70 and could easily have continued for many more years. So he and his partner, who had also reached the same conclusion, went to the junior partner with their decision. After a serious discussion, he decided that he did not want to assume the debt load it would take, so another solution needed to be found.

Zions Bancorporation, Salt Lake City, was looking for successful, commercially oriented agencies to purchase--and they had the wherewithal. Grant-Hatch focuses on industrial, commercial and surety bonds. Founded in 1886, it is one of Utah's oldest and best-known businesses. It will continue to
operate under its current name. Its 14 employees have more than 300 years of combined experience in the insurance industry.

Zions, with assets of nearly $25 billion is the 39th largest bank in the United States.

The purchase involved an exchange of stock that turned Dick from a retired agent to a retired banker. *