BB&T Corporation principal subsidiary Branch Banking and Trust Company has entered into a purchase agreement to buy insurance premium finance company AFCO Credit Corporation and its Canadian affiliate, CAFO Inc., from Mellon Financial Corporation.
The transaction, terms of which were not disclosed, is subject to regulatory approval and is expected to be completed during the first quarter of 2007.
“This acquisition is consistent with our announced strategy to add high quality, well-managed specialized lending businesses,” said BB&T Chairman and Chief Executive Officer John Allison. “Partnering with the very experienced professionals at AFCO and CAFO will significantly strengthen our insurance premium finance franchise in the United States, as well as provide entry into Canada – a first for BB&T.”
Insurance premium financing is a loan which enables businesses and consumers to pay their insurance costs over time, improving cash flow and providing additional credit and working capital.
The acquisition would move BB&T from the ninth to second-largest provider of insurance premium financing in the United States and the largest in Canada. BB&T already operates insurance premium finance subsidiary Prime Rate Premium Finance Corporation Inc. AFCO and CAFO would operate separately from Prime Rate using their existing brand names as a unit of BB&T’s Specialized Lending Division.
“We are very pleased about the opportunities that our upcoming affiliation with BB&T will represent,” said Daryl Zupan, president of AFCO and CAFO. Zupan and his existing senior management team will continue to oversee the organization’s 16 offices throughout the U.S. and Canada.
Source: BB&T Corporation
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