Associated Banc-Corp (ASB) Agrees to Sell Insurance Business

Associated Banc-Corp ASB has agreed to sell Associated Benefits & Risk Consulting to USI Insurance Services LLC for $265.755 million in cash. Closing of the deal, expected in late second-quarter or early third-quarter 2020, is subject to customary closing conditions.

Per the agreement, the purchase price is subject to adjustment for, among other things, transaction expenses and working capital changes.

Associated Banc-Corp’s president and CEO, Philip B. Flynn, stated, “This transaction allows us to monetize our investment in ABRC and further our strategic goals of enhancing shareholder value and being a source of strength for our customers, colleagues and communities.”

He added, “The meaningful valuation difference between regional banks and insurance brokers is not reflected in Associated's share price, and that difference will also make it difficult for ABRC to grow through acquisitions. In addition, the capital provided from this transaction will support loan growth, create an added buffer during these trying economic times, and support our dividend policy.”

Michael J. Sicard, chairman and CEO of USI Insurance Services said, “We look forward to welcoming the entire team of professionals from ABRC to the USI family. Their collective passion for delivering superior solutions and service to clients complements USI's strong focus on building long-term client relationships.”

Being a multi-line insurance agency with 400 employees, Associated Benefits & Risk Consulting provides employee benefits, retirement plans, compliance, business insurance, risk management and individual insurance solutions.

Headquartered in Valhalla, NY, USI Insurance Services is one of the largest insurance brokerage and consulting firms in the world. It delivers property and casualty, employee benefits, personal risk, program and retirement solutions to large risk management clients, middle market companies, smaller firms and individuals.

While Associated Banc-Corp’s organic and inorganic growth strategies remain impressive, the company’s bottom line might be adversely impacted by mounting expenses, mainly resulting from an increase in technology costs. Moreover, lower interest rates will likely continue to put pressure on its net interest margin, thus hurting revenue growth to some extent.

Shares of Associated Banc-Corp have lost 38.2% so far this year compared with a 35.7% decline recorded by the industry.

Currently, Associated Banc-Corp carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks from the finance space are mentioned below.

Virtu Financial, Inc.’s VIRT Zacks Consensus Estimate for current-year earnings has been revised upward by 42.5% over the past 60 days. The company currently sports a Zacks Rank #1 (Strong Buy).

PennyMac Financial Services, Inc. PFSI has witnessed an upward earnings estimate revision of 82.9% for the current year over the past 60 days. At present, the company carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for earnings of World Acceptance Corporation WRLD has been revised marginally upward for the current fiscal year over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy).

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