German American Bancorp, Inc. announces the sale of the assets of German American Insurance, Inc. to Hilb Group
German American Bancorp (Nasdaq: GABC) announced and completed the sale of German American Insurance (GAI) to Hilb Group for $40 million. The deal, representing four times GAI's 2023 revenues and 24 times its after-tax earnings, resulted in a net after-tax gain of $27 million. GAI will continue operations under the name 'German American Insurance – A Hilb Group Company' and retain its staff, with Diana Wilderman remaining as President. This sale ensures access to superior insurance products for customers and supports the company's strategic growth. Hilb Group, a top 25 US insurance agency backed by The Carlyle Group, aims to leverage GAI's established market presence in the Midwest.
- All-cash transaction for $40 million.
- Net after-tax gain of approximately $27 million.
- Purchase price represents four times GAI's 2023 revenues.
- Transaction valuation is 24 times GAI's 2023 after-tax earnings.
- GAI will continue to operate under its existing name and leadership.
- Hilb Group, a top 25 US insurance agency, will provide expanded access to products and services.
- All GAI team members retained in the transition.
- Continued referral relationship offers German American Bank customers access to market-leading insurance services.
- Hilb Group's growth strategy aligns with expanding in key markets like the Midwest.
- Loss of a wholly-owned subsidiary may reduce GABC's asset base.
- Potential dependency on Hilb Group for providing insurance products to customers.
- Possible shareholder concern over the long-term impact of asset sales on company stability.
Insights
The sale of German American Insurance (GAI) to Hilb Group for
From a strategic standpoint, the divestiture allows GABC to focus more on its core banking operations, potentially enhancing operational efficiency and capital allocation. The ongoing referral relationship with Hilb Group ensures continued service for GAI’s clientele, which could help mitigate potential revenue losses from the sale.
However, it's essential to consider the long-term impacts on GABC's earnings. While the immediate cash gain is substantial, the loss of recurring revenue from GAI might require strategic reinvestment to maintain growth trajectories.
Investors should monitor how GABC leverages the proceeds from this sale. Effective reinvestment could lead to strong future returns, while misallocation could negate the immediate financial gains.
This transaction is particularly noteworthy within the broader insurance brokerage industry. The acquisition by Hilb Group, a Top 25 US Insurance Agency, aligns with common industry trends of consolidation and expansion into regional markets. Hilb Group’s strategy to grow through acquiring leading brokers in key markets is evident here and it underscores the competitive landscape where larger firms are consolidating to enhance their market presence and service capabilities.
For GAI, being part of a larger entity such as Hilb Group could mean enhanced access to innovative products and services. This integration might offer synergies that can drive growth and improve service delivery, benefiting existing and potential clients.
The retention of the entire GAI team and leadership underlines the value Hilb Group sees in maintaining continuity and leveraging existing local expertise. This can be reassuring to clients and may facilitate a smoother transition.
Retail investors should observe how this consolidation impacts the competitive dynamics in the regional insurance market and whether similar transactions could occur, signaling a broader trend of value creation through consolidation.
JASPER, Ind., June 03, 2024 (GLOBE NEWSWIRE) -- German American Bancorp, Inc. (Nasdaq: GABC) today announced and closed the sale of the assets of its wholly-owned subsidiary German American Insurance (GAI) to Hilb Group, an industry-leading insurance broker. The all-cash transaction is for
“Our decision to partner with Hilb Group for this transaction ensures the continued access to the best insurance products and services for our customers and provides a great new home for GAI’s employees,” said D. Neil Dauby, Chairman and CEO of German American Bancorp, Inc. “This sale allows us to realize significant value at an opportune time. The GAI team has done a tremendous job building the agency in the last 25 years, and we are confident the expanded access to products, services and expertise through Hilb Group will support a strong future for all.”
As part of the transaction, German American Insurance will continue to operate throughout southern Indiana and Kentucky under the name “German American Insurance – A Hilb Group Company” and will remain under the leadership of Diana Wilderman, President of German American Insurance. Wilderman said, “We are very excited that our entire insurance team will join Hilb Group. Hilb’s dedication to the communities they serve and their culture of providing the very best service to their customers is exactly what built the success of German American Insurance.”
“We are pleased to welcome the highly respected German American Insurance team and to expand upon our existing Midwest presence,” Hilb Group CEO Ricky Spiro said. “This addition of GAI fits with our strategy of growing through leading insurance brokers in key markets, and building on the great reputation – and innovative resources we provide – among the clients and communities we are privileged to serve.”
In addition to retaining all GAI team members, an ongoing referral relationship to Hilb Group will provide German American Bank customers access to market-leading insurance brokerage services.
Hilb Group is a Top 25 US Insurance Agency and has been an Inc. 5000 fastest-growing private company for nine years. Founded in 2009, the company is a leading property and casualty and employee benefits insurance brokerage and advisory firm. Headquartered in Richmond, Virginia, Hilb Group is backed by The Carlyle Group, one of the world’s leading investment firms, and has more than 2,200 employees with 125+ locations in 29 states – and service to all 50 states.
Piper Sandler & Co. served as financial advisor to German American and Dentons Bingham Greenebaum LLP served as legal counsel.
About German American Bank
German American Bancorp, Inc. is a Nasdaq-traded (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank, operates 74 banking offices in 20 contiguous southern Indiana counties and 14 counties in Kentucky.
Media Contact:
D. Neil Dauby
Chairman & Chief Executive Officer
Bradley M Rust
President & Chief Financial Officer
812-482-1314
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