Bank Cadence agrees to sell its insurance division to Arthur J. Gallagher for a sum of $904 million

Cadence Bank Sells Insurance Operations to Arthur J. Gallagher & Co. for $904 Million

In a significant move, Cadence Bank has announced the sale of its insurance operations to Arthur J. Gallagher & Co. for $904 million in a cash transaction. The sale, which was first made public about a month ago, is part of Cadence Bank's strategy to cut noninterest expenses and reinvest capital into its strategic growth initiatives.

Headquartered in Baton Rouge, Louisiana, Cadence Insurance has approximately 770 employees in 30 offices across nine states in the Southeast. The insurance segment originated as a collection of agencies acquired by BancorpSouth from 1999 through 2003. Following the transaction, executive leadership, management, and employees of Cadence Insurance will join Gallagher.

Markham McKnight, the CEO of Cadence Insurance, will be joining Gallagher Company. The move comes as Gallagher has been on a buying spree, declaring acquisition plans for three insurance companies in the past week. Gallagher has stated that the acquisition of Cadence Insurance will further strengthen its position in the US market.

The sale of Cadence Insurance is expected to provide Cadence Bank with net cash proceeds of $650 million. This will help the bank reduce wholesale borrowings and reinvest capital into its strategic growth initiatives. The immediate net capital increase after-tax reduction for Cadence Bank is estimated to be roughly $620 million.

Truist, another major player in the insurance industry, recently announced plans to sell 20% of its insurance brokerage unit to private-equity firm Stone Point Capital for $1.95 billion. It is reported that Truist is in talks to sell the rest of its insurance brokerage segment to the same buyer for nearly $10 billion.

Cadence Bank's decision to sell its insurance operations comes at a time when the bank's adjusted efficiency ratio during the third quarter was 66.1%, much higher than the 54.4% the company hoped to achieve by 2022. The bank's CEO, Rollins, stated that the transaction will provide tools for improvement.

Following the transaction, Cadence Insurance has nearly 35 closed branches and a reduced headcount of 319, with 80 more job cuts expected in the fourth quarter. Despite these changes, Cadence Bank remains committed to its growth and strategic initiatives, aiming to provide the best possible service to its customers.

Bank Cadence agrees to sell its insurance division to Arthur J. Gallagher for a sum of $904 million