Continuing with its streamlining of insurance products, the U.S. banking and financial services firm Wells Fargo & Company WFC is set to exit the Personal Insurance business. Following the strategic analysis of its business which began in October 2017, the Wall Street biggie decided to exit the business. Details of the Exit
To start with the winding down process, Wells Fargo will instantly stop marketing and product promotion-related activities. Notably, the bank expects to complete the exit process by first-quarter 2018. However, till then, Wells Fargo will continue to provide Personal Insurance products and serve customer policies.
"Wells Fargo continually reviews our product and service offerings to ensure they meet our customers' needs and align with the company's long-term strategic goals," said Laurie Nordquist, head of Personal Insurance. "The decision to exit the Personal Insurance business reflects these practices, and we will wind down operations in a measured and responsible way for our existing customers," added Nordquist.
A number of auto, homeowners, renters and umbrella personal insurance products have been provided by Wells Fargo, since 2003. Notably, among insurance brokerage agency in the company's portfolio, Personal Insurance business is the last to exit. However, the contribution of this business was immaterial to the bank's financials. Therefore, the winding down will not affect Wells Fargo's Wealth and Investment Management's life insurance practice. Similar Actions
Previously, in December 2015, Wells Fargo vended its crop insurance business. Rural Community Insurance Services (RCIS) and its subsidiary Rural Community Insurance Company (RCIC) was sold to Zurich American Insurance Company (ZAIC) - a subsidiary of Zurich Insurance Group. The deal was completed in 2016.
Further, in June 2017, Wells Fargo signed a deal with USI Insurance Services to divest Wells Fargo Insurance Services USA, Inc ("WFIS"). The transaction is expected to close by the end of fourth-quarter 2017. The company offloaded its commercial insurance business with a view to regain focus on banking activities. Nonetheless, Wells Fargo's personal insurance business will continue to operate under the consumer lending segment.
Early this November, Wells Fargo Insurance, Inc. announced a purchase agreement with the global insurance brokerage - Hub International Limited - for vending its crop insurance broker business. Conclusion
It has been more than a year since the news of Wells Fargo's alleged involvement in unfair sales practices hit headlines. Apart from being penalized by regulators, the bank had to go through a lot of restructuring. A number of consumer businesses have been affected, including some insurance products. Moreover, the bank was banned from conducting its municipal business in a number of states.
Currently, the banking giant is caught in a horde of litigations over several malpractices which have come into the spotlight. It is going to be a long and expensive journey for the bank till it gets all the dust settled. However, the company has been taking several initiatives to revamp its financial position. In May 2017, it doubled its cost-cutting targets to combat escalating expenses and improve financials. These efforts might help the company regain confidence of its clients and shareholders.
Wells Fargo currently carries a Zacks Rank #4 (Sell).
The bank's performance, so far this year, reflects investors' disappointment. Shares of Wells Fargo have gained just around 0.8%, significantly underperforming the industry
's rally of 9.2%.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report First Financial Bancorp. (FFBC): Free Stock Analysis Report Enterprise Financial Services Corporation (EFSC): Free Stock Analysis Report Federated Investors, Inc. (FII): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research