Shefi Ben-Hutta
Editor at Coverager

Towne on Top

This week’s current events reveal that Towne Insurance (a division of TowneBank) has become the largest bank-owned insurance agency. As a side note, Towne’s ‘get a quote’ form is powered by Xilo.

Let’s rewind.

In 2016, Marsh acquired Bluefin Insurance Group, a commercial broker in the UK, from AXA for £295 million ($364 million). Bluefin had 1,500 employees and 150,000 clients, reporting £122 million in revenue for 2015—implying a 2.4x valuation multiple. In 2018, Marsh acquired Jardine Lloyd Thompson Group (JLT) for $5.6 billion based on £1.45 billion in revenue, resulting in a ~3x multiple. Fast forward to this week, and Marsh is now acquiring McGriff Insurance Services, a division of TIH (formerly a division of Truist until a few months ago), for $7.75 billion, based on McGriff’s $1.3 billion in revenue for the 12 months ending June 30, 2024, implying a 6x multiple. The US deals are larger, but also, the industry has seen another exit of a bank-owned insurance agency.

Before this came the acquisition of FBBINSURANCE (Apr 2024).

Before that, Cadence Insurance (Nov 2023).

And before that, Eastern Insurance (Oct 2023).

Here are the extra details: Marsh purchased Fisher Brown Bottrell Insurance from Trustmark National Bank for $345 million, reflecting a 5.9x multiple of FBBINSURANCE’s 2023 revenue. Last year, Gallagher acquired Cadence Insurance from Cadence Bank for $904 million in cash, based on $170 million in revenue for the 12 months ending September 2023, suggesting a 5.3x multiple. Similarly, Gallagher bought Eastern Insurance Group from Eastern Bank for $510 million, based on $104 million in revenue for the 12 months ending June 2023, implying a 5x multiple.

For these banks, selling their insurance operations means freeing up cash to grow core banking operations, invest in new ventures, or return capital to shareholders. In short, banks have other opportunities, and where there are opportunities, there are opportunity costs. MarshBerry, an investment banking firm serving the wealth management and insurance distribution industries, described this shift in a 2023 article titled Why Bank-Owned Insurance Might Soon Become Obsolete. In the late 1990s, two key events—the Barnett Bank case (1996) and the Gramm-Leach-Bliley Act (1999)—allowed banks to start selling insurance to boost their fee-based income. When successful, banks like BB&T (now Truist) ran insurance agencies for over a century. When unsuccessful, the common themes were a lack of appetite, cross-selling processes, talent, and interest to execute on this model.

A Rose by Any Other Name

MarshBerry focuses on “bank-owned” insurance agencies, but financial institutions and fintech-owned agencies do turn to insurance. Insuritas , active since 1998, deploys and operates white-labeled insurance agencies within financial institutions, while Coverage Direct entered the market a few years later. Interestingly, a 2021 blog post by Coverage Direct was titled, “Why a Bank-Owned Insurance Agency is the Next Big Thing.” But insurance is rarely about the next big thing—it’s more about the second-next big thing, a consideration that comes after other priorities. Coverager Data shows that financial institutions are increasingly turning to insurance.

This year:

  • Virgin Money expanded its offerings with home and landlord insurance through Uinsure.
  • Tesco Bank partnered with Pinnacle Pet Group to launch pet insurance services for 400,000 customers starting in 2025.
  • Celtic Bank now allows small business loan applicants to apply for insurance directly through Coverdash’s embedded technology.
  • Digital banking app KOHO offers renters insurance via Walnut Insurance.
  • INZMO partnered with Estonian fintech Inbank to provide electronics insurance for their merchant partners’ customers.
  • Ocean State Credit Union selected Insuritas to launch its digital insurance platform.

There’s more—and there will be more.

Shifting Gears

Both Lemonade and Figo have over 200,000 pet policies. Figo has been in business for over a decade, while Lemonade launched its pet product in July 2020. In terms of distribution, Figo has Costco, and Lemonade has Chewy. Meanwhile, Embrace has over 500,000 policies—and partnerships with GEICO and USAA (thanks to Laura and Alex). In terms of strategy, GEICO is still in a race with USAA, Figo is still in a race with Lemonade, and TowneBank (and credit unions, for that matter) are still in a race with Truist. The race is never over, but for some, insurance income isn’t the ultimate goal.