Wachovia taps Tampa's Davis Baldwin Insurance

By JEFF HARRINGTON

© St. Petersburg Times, published September 8, 2000

Wachovia Bank has agreed to buy Tampa-based DavisBaldwin Insurance in one of the country's biggest mergers spurred by federal deregulation tearing down barriers between the two industries.

The deal announced Thursday, which had been widely anticipated for months, unites the largest private insurance broker in Florida with a North Carolina bank that has been clamoring for more than a year to widen its foothold in Florida.

Terms were not disclosed.

Wachovia Corp., based in Winston-Salem, N.C., plans to operate DavisBaldwin as a subsidiary of its Wachovia Insurance Services unit.

For now, DavisBaldwin is keeping its name, its landmark headquarters in the Westshore area and its employee base. It expects to add to its 130 employees as it expands into Orlando and elsewhere around the state.

Wachovia moved the headquarters of its Florida operations to Tampa last year as it launched a major effort to open branches statewide. Principals with DavisBaldwin envision eventually relocating under one roof with the bank's Tampa headquarters when their 25,000-square-foot lease in Westshore expires in 2003.

"Over a period of time we plan to co-brand the DavisBaldwin name with Wachovia," said L. Lowry Baldwin, president of the insurance agency. "It makes a lot of sense to have a regional brand we could both use in different selling situations."

Shares in Wachovia closed Thursday at $57.44, up 19 cents.

Wachovia has a core group of 44 people in its insurance unit and another 750 people licensed to sell insurance products throughout its five-state network.

DavisBaldwin adds a critical element to the mix: a track record of adding new business and new products. In an industry growing about 2 percent a year, DavisBaldwin posted annual growth rates of about 20 percent during the 1990s.

"The sales force for Wachovia will be DavisBaldwin. They have the connections and reputation in the insurance industry," said David Holton, president of Wachovia Insurance Services. "We are looking to them."

DavisBaldwin was formed in 1991 by the merger of two of Tampa's oldest agencies: Davis Brothers, which was founded in 1936, and Baldwin & Sons, founded in 1960.

The combined company grew into the 70th-largest privately held insurance broker in the country, with U.S. revenues of $20-million.

"From my perspective, it's hard to sell an asset that's been in your family for 70-plus years." said Charles M. "Chuck" Davis Jr., chairman and CEO of DavisBaldwin. Davis, 44, will act as a consultant to Wachovia after the merger; Baldwin, 41, will assume the title of principal executive for the agency.

The deal is the largest bank purchase of an insurance agency in the Southeast and one of the largest in the country since last year's sweeping financial modernization law. The changes in federal law removed the final legal, operational and jurisdictional barriers between companies involved in banking, brokerage, underwriting and risk consulting.

Initially, most banks treaded slowly into buying insurance companies. But activity picked up last month in Florida as F.N.B. Corp. of Pennsylvania and Huntington Bank of Ohio both moved forward with buying Florida agencies.

Wachovia and DavisBaldwin were introduced as possible partners in the beginning of the year and began active negotiations in the spring.

Davis floated one theory on why it took a while to come to terms.

"This was Wachovia's first property and casualty insurance agency acquisition and it was probably a little different animal than what it was used to," he said. "We had to explain to them a little about our differences."

Baldwin in April confirmed talks with at least two financial firms about a buyout but he would not confirm Wachovia's interest. Throughout their courtship, the two companies refused to discuss persistent rumors about their marriage.

However, in the wake of moves by F.N.B. and Huntington, Baldwin acknowledged two weeks ago that the climate was ripe for a deal.

"What we're really seeing is the first wave of the impact of financial deregulation," he said.

The deal is expected to close in the fourth quarter.

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