Wachovia Insurance Services, the insurance brokerage arm of Wachovia Corp., will be unaffected by today's announced sale of the company's banking services to Citigroup Inc., according to the company.
Mary Eshet, a spokeswoman for Charlotte, N.C.-based Wachovia, said there would be no change in the insurance brokerage operations and clients would not notice changes.
Wachovia is a major insurance brokerage player, ranked in the top 15 insurance brokerage firms in the United States. The company says it employs more than 1,300 insurance professionals, with annual revenue exceeding $400 million and premium placements exceeding $4 billion. It has 34 offices in 15 states and Washington, D.C.
Under the agreement shepherded by the Federal Deposit Insurance Corporation, New York-based Citigroup purchased the banking subsidiaries of Wachovia for $2.16 billion in stock and assumed $53 billion in debt.
The agreement calls for Citigroup to absorb $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb the remainder. The FDIC said it will receive $12 billion in preferred stock and warrants to compensate it for bearing the risk.
Citigroup said it would acquire more than $700 billion of assets of Wachovia's banking subsidiary and related liabilities.
While Wachovia has sold its banking business, other parts remain in addition to the insurance business. The company said its two main subsidiaries, Wachovia Securities and Evergreen Asset Management, will remain.
"During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges," said Robert K. Steel, chief executive officer and president of Wachovia, in a statement. "Today's announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio."
Golden West was a mortgage originator that Wachovia acquired in 2007 and saddled the bank with billions in bad debts.
The deal is expected to be completed by the end of this year, both Citigroup and Wachovia said.
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