AmWINS said the sale would afford it greater opportunities to develop relationships with national retail brokers, while diversifying the Charlotte-based wholesalers product offerings, geographic presence and distribution force. The Stewart Smith acquisition would bring AmWINS' total premium placements to over $2.4 billion.

Mark Smith, president and CEO of Stewart Smith, will assume the role of president of the AmWINS Brokerage Division.

In a statement, Joe Plumeri, chairman and CEO of Willis, said the sale is in keeping with the firm's emphasis to focus on its retail brokerage operations, strengthening relationships there while divesting itself of non-core operations. “In American Wholesale, we have found a dynamic company committed to this important sector of our industry,” he said. “In only three years, their team has built one of the most respected wholesale organizations in the country.”

M. Steven DeCarlo, AmWINS president and CEO, said the acquisition expands the firm's geographic footprint in the Pacific Northwest, Midwest and Southeast. “This acquisition strategically enhances our insurance brokerage offerings to retail agents and brokers across the country. That said, our new scale by no means replaces the importance of earning our stripes each and every dayone account at a time,” he said.

American Wholesale said it has received a financing commitment for this transaction from Credit Suisse First Boston.

Steven Wevodau, principal with W.F.G. Capital Advisors, based in Harrisburg, Pa., called Willis action “the beginning of the industry becoming more reflective and sensitive to their position in light of the investigations of New York Attorney General Eliot Spitzer and other attorneys general. We are beginning to see and will continue to see insurance brokers returning to their roots.”

Concerns about conflicts of interest over wholesale brokerage holdings have emerged because some argue that retail brokers could steer wholesale placements toward their in-house units, picking up commission fees there in addition to the retail commissions.

Prudential Equity Group issued an analysis noting that the sale would not have a material effect on Willis' earnings. While Willis said the sale was to focus its business on retail brokerage, Prudential speculated that the move was done in a continuing effort to avoid conflicts of interest between retail and wholesale units.

The sale, Prudential continued, could put pressure on mega-brokers Marsh and Aon to do the same with their wholesale units. Should Aon sell its wholesale unit (Swett & Crawford), it would impact earnings more than MMC selling its unit (Crump), said Prudential, which added that it did not expect MMC to sell its wholesale unit.

Shortly after Prudential issued its analysis, Aon announced that it is indeed “exploring alternatives” relating to its ownership of Swett & Crawford. The wholesale brokerage has “a great future,” said Aon Chairman and CEO Patrick Ryan. “By exploring alternatives, we expect to determine if Swett & Crawfords potential can be realized more fully under different ownership.”

Perhaps bucking this perceived trend, Brown & Brown Inc. announced plans to acquire Hull & Company Inc., based in Ft. Lauderdale. The Daytona Beach, Fla.-based retail brokerage's acquisition would add an operation regarded as one of the top-10 wholesalers in the nation, with approximately $63 million in annualized revenue.

B&B said that after the acquisition, Hullwith 20 offices in nine stateswould continue to operate under its own name as a stand-alone operation at its existing locations. No details of the deal were revealed.

Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.