Wells Fargo (WFC) To Divest Part Of Its Insurance Business

Wells Fargo & Company (NYSE:WFC) recently signed a deal with USI Insurance Services to divest Wells Fargo Insurance Services USA, Inc (“WFIS”). The transaction is expected to be completed by the end of fourth-quarter 2017.

The company is offloading its commercial insurance business with a view to regain focus on its banking activities. Nonetheless, Wells Fargo’s personal insurance business will continue to operate under the consumer lending segment and will offer products like auto, home, umbrella and renters insurance.

The company did not disclose terms of the transaction. Perry Pelos, head of Wholesale Banking segment, said that the current employees of WFIS will continue providing services under USI Insurance Services.

This is not the first time that these two companies inked a deal. In May 2014, Wells Fargo sold its 40 small regional insurance brokerage branches to USI Insurance Services.

The fake accounts scandal made a significant impact on Wells Fargo’s performance. The company was banned from conducting its municipal business in a number of states.

However, the company has been taking several initiatives to revamp its financial position. In May 2017, it doubled the cost-cutting targets to combat rising expenses and improve financials. These efforts will likely help the company regain confidence of its clients and shareholders.

Wells Fargo’s shares have gained 13.1% in the last one year, underperforming the Zacks categorized Banks - Major Regional industry’s rally of 40.2%.

Currently, the bank carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the financial space include M&T Bank Corporation (NYSE:MTB) , Comerica Incorporated (NYSE:CMA) and HSBC Holdings (LON:HSBA) plc (NYSE:HSBC) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

M&T Bank witnessed a 1.1% upward revision in the Zacks Consensus Estimate for the current year, over the last 60 days. Also, its share price gained 43.1% over the last one year.

The Zacks Consensus Estimate for Comerica's current-year earnings moved slightly upward over the last 60 days. Its share price increased 82.5% over the last one year.

HSBC’s current-year earnings estimates were revised nearly 1% upward, over the last 60 days. Over the last one year, its share price surged 53.4%.

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