BB&T Completes Acquisition of Swett & Crawford

April 4, 2016

BB&T Corp. said it has completed its acquisition of wholesale insurance and reinsurance broker CGSC North America (Swett & Crawford) from Cooper Gay Swett & Crawford.

North Carolina-based BB&T said it acquired the U.K.-based Swett & Crawford for $500 million in cash and that it expects the deal to add more than $200 million, or 15 percent, in annual revenue to its BB&T Insurance division.

Swett & Crawford will operate as part of BB&T’s wholesale property/casualty broker and managing general agent, CRC Insurance Services.

CGSC North America consists of the wholesale broker Swett & Crawford, which had merged with Cooper Gay to become Cooper Gay Swett & Crawford in 2010; specialty managing general agencies including J.H. Blades & Co and Creechurch International Underwriters; and a U.S. reinsurance broker. The specialty managing general agent Creechurch, which operates in Canada, is not included in the sale.

This transaction excludes all Swett & Crawford’s non-U.S. business, which accounts for less than five percent of its total revenue.

BB&T said it expects to record approximately $500 million of goodwill and intangibles as a result of this acquisition.

CGSC announced last November that it was looking to sell its North American business unit.

John Howard, chairman and chief executive officer of BB&T Insurance, said last month when the deal was announced that it represented a “compelling opportunity” to further build BB&T Insurance and add a team of industry specialists.

According to Standard & Poor’s, CGSC has indicated that it will likely use the proceeds from the sale to lower its corporate debt.

“The North American division, Swett & Crawford, was doing pretty well. It was pretty much the international group that had troubles,” said Julie Herman, associate director, Financial Services Ratings at S&P, in November when CSGC revealed its divestiture plan. “And because of that, the company’s capital structure became completely unsustainable. Their leverage was 11 times as of the 12 months ended Sept. 30, 2015. So we knew the management was going to take action.”

For the first nine months of 2015, the North American division comprised 60 percent of CGSC Group revenues and 78 percent of group profits, according to S&P. Thus the sale of this division and use of proceeds is expected to have a material impact on the CGSC group’s credit profile, S&P said.

Herman called the sale a “drastic move” but one that will allow the management team to focus attention on international operations.

Since purchasing Swett & Crawford in 2010, while the North American business unit has performed rather well, the international division has declined, according to S&P.

Steve Hearn, CGSC Group CEO, said last month that the proceeds of the sale will provide CGSC with the resources it needs to “build for the future with a fresh outlook.”

Raleigh, N.C.-based BB&T Insurance operates more than 200 insurance agencies through subsidiaries BB&T Insurance Services, BB&T Insurance Services of California, McGriff, Seibels & Williams, CRC Insurance Services, Crump Life Insurance Services and AmRisc.

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