Cadence Bank entered into a definitive agreement to sell its insurance operations, Cadence Insurance, to Arthur J. Gallagher & Co. for $904 million in cash.
The sale of Cadence Insurance, the second largest bank-affiliated insurance brokerage in the nation as ranked by Business Insurance, will yield an estimated 24% tangible book value per share accretion and 160 bps improvement in CET1. On an after-tax basis, the immediate net capital increase is expected to be approximately $620 million and net cash proceeds are estimated at $650 million. The sale is expected to be slightly positive to earnings per share for Cadence Bank through the use of cash proceeds to reduce wholesale borrowings. Further net income and earnings per share enhancements are anticipated as generated capital is deployed through strategic and franchise growth initiatives over time.
“We have always liked the insurance business,” Dan Rollins, chairman and CEO of Cadence Bank, said. “Over the past 24 years, under exceptional leadership, the team has grown Cadence Insurance into the second largest bank-affiliated insurance brokerage in the country. The sale will allow us to focus on what we do best: building strong, long-lasting banking relationships while also continuing to realize our long-term strategy. I have enjoyed working with the Cadence Insurance team immensely and have profound respect for what they do and how well they do it. On behalf of all of us at Cadence, we will miss them.
“Gallagher is well regarded for its culture, ethics, service and responsibility to its people, and I am fully confident our customers and teammates can expect the same level of quality service and commitment to being a great place to work they experience today.”
“Cadence Bank has been a fantastic partner of ours for the past 24 years, supporting our growth and evolution,” Markham McKnight, CEO of Cadence Insurance, said. “During this collaborative process with Cadence Bank, we both determined that Gallagher is the best partner for us. Our team is what makes us who we are, and Gallagher recognized from the first conversation the talent of our team and its commitment to our clients and communities. We are energized about our future with Gallagher and what our team will be enabled to deliver to our clients.”
Cadence Bank anticipates the transaction, which is subject to standard closing conditions, will close in Q4/23. Cadence Insurance’s executive leadership, management and employees will join Gallagher following the sale.
Morgan Stanley, MarshBerry and Ernst & Young served as financial advisors and Hodgson Russ provided legal counsel to Cadence Bank on this transaction.
