Wells Fargo WFC has agreed to divest Centurion Life Insurance to Bestow, a digital life insurance platform. Terms of the deal, pending regulatory approvals, were not disclosed.
Dallas-based Bestow introduced an entirely digital platform in its home state of Texas, which uses data and algorithms to significantly reduce the time taken in buying life insurance. Consumers are not required to undergo a medical examination and can purchase a policy in about five minutes compared with four to six weeks when buying from an agent.
Centurion, an Iowa-based life insurance company has license in 47 states and the District of Columbia. By acquiring Centurion, Bestow will be able to improve its product design, pricing, underwriting and distribution for its customers and partners.
Melbourne O’Banion, co-founder and CEO of Bestow, said “With Bestow’s focus on expanding eligibility and access, we’ve known since the start that becoming a carrier would be a necessary part of our growth strategy. We’re thrilled to build on our momentum with this acquisition to enable more customers to get the life insurance they need.”
Wells Fargo has undertaken several such divestiture measures over the years to focus on its core operations, improve efficiency and strengthen balance sheet. These have resulted in significant cost savings for the bank.
In June 2020, Wells Fargo sold its Global Alternative Investments Feeder Fund Platform to a financial technology firm, iCapital Network, in an effort to simplify operations and provide innovative products to the bank’s clients.
Though post breakout of the sales scandal Wells Fargo suffered from several sanctions, including a cap imposed by the Federal Reserve on asset growth in early 2018, the company has come a long way in its remedial journey. It continues to invest in the businesses to enhance compliance and risk management capability.
Shares of Wells Fargo have lost 2.7% in the last six months against 10.7% growth registered by the industry.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amid the coronavirus pandemic-induced economic slowdown, several financial firms are undertaking initiatives to focus on core businesses. In November, People’s United Financial’s PBCT banking subsidiary People’s United Bank completed the divesture of People’s United Insurance Agency to AssuredPartners.
At the end of September, Umpqua Holdings Corporation UMPQ signed an agreement to divest the wealth management business to Steward Partners Global Advisory, LLC. Also, CIT Group CIT sold the trust and wealth advisory business to Sunflower Bank, N.A., a subsidiary of Denver, CO-based FirstSun Capital Bancorp.
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