Wells Fargo & Co (NYSE:WFC) intends to expand its insurance business as low interest rates are adversely affecting the profitability of its large lending businesses. Few years ago, it slimmed down some of its parts of insurance business. However, now it wants to bring the focus back on insurance segment. It reallocated or hired almost 50 executives to the insurance business in recent months in order to develop relationships with its existing middle-market customers, among others.
The expert view
Laura Schupbach, the head of Wells Fargo Insurance, said that Wells Fargo and team want to expand the business and identify how to leverage the banking relationships together with the power of the brand. The insurance segment contributed for 4% of Wells Fargo non-interest income, or 2% of total revenue. In 2011, the bank planned to double the insurance unit’s revenue in the last decade from almost 2.5% of total revenues.
The latest recruitment come after Wells Fargo sold numerous smaller offices and restructured its business in past few years. In its initiatives it declined to number 8 in the list of largest insurance brokers of the world based on 2013 brokerage revenues. Still, the bank holds a prominent position in insurance segment among banks. The segment with almost 5,000 employees across the nation puts $9 billion in risk premiums per year and writes approximately $2 billion in insurance as the country’s leading crop insurance provider.
Wells Fargo & Co (NYSE:WFC) also operates as an agent placing services for individuals as well as small businesses. It works together with numerous hundred insurance carries. The management is working to reduce the number by a couple hundred in order to get more focus on productive measures. On the consumer aspect, Wells Fargo is leveraging its pioneering position as a mortgage lender to assist sell homeowners’ insurance.