Wells Fargo (WFC) has agreed to sell their commercial insurance segment in a deal with USI Insurance Services. Wells Fargo plans to refocus the company’s efforts on their core banking services and products, removing the company from their portfolio in the process.
The deal is expected to close in the fourth quarter of the year, with no terms publicly disclosed at this time.
The third-largest bank in the country will sell off their Wells Fargo Insurance Services USA operations, with all of the employees joining USI in the process. Charlotte, a major operations hub, employs 200 workers who will also join the company.
The company’s insurance services operations offers targeted insurance products to small businesses, large corporations and high-net worth clients.
USI has dealt with Wells Fargo in the past, with the private insurer purchasing 40 brokerage offices from Wells Fargo in 2014. Wells Fargo will still remain in control of their personal insurance business services, which offers renters insurance, home insurance and auto insurance to their clients.
The company will merge personal insurance operations into their consumer lending operations, according to sources close to the matter.
Wells Fargo stock rallied on the news, jumping 2.20% on Wednesday.
The company is also being supported by the announcement that their 2017 Capital Plan has not been objected to by the Federal Reserve Board.
“We are pleased by today’s CCAR result, which demonstrates the strength of our diversified business model, strong capital position, and our continued focus on risk management,” said CEO Tim Sloan.
The plan will cover the company from the third-quarter in 2017 through the second quarter of 2018, according to reports.
The plan also increases the company’s common stock dividend by $0.01 per share to $0.39 per share in the third-quarter of the year. The increase will be subject to approval from the Board of Directors.
Common stock repurchases of up to $11.5 billion are also included in the plan and is a $3.2 billion increase from repurchases made for the four quarter period ended in Q1 2017. Management discretion dictates common stock repurchases each quarter.
Wells Fargo’s stock has rebounded well in recent quarters following a major stock disturbance last year due to a banking scandal. The company’s stock is up over 4% in the past 30-day period and down 2.4% in the past 90 days.
The company admitted that they needed to act sooner to correct the fake account scandal. The company is also under scrutiny over an alleged scandal in its mortgage department