Banker & Tradesman photo / file
Changes continue at Berkshire Bank as the Boston-based bank gets new board leadership and plans to sell its insurance subsidiary.
The bank’s parent company, Berkshire Hills Bancorp, has agreed to sell the assets and operations of Berkshire Insurance Group Inc. to Brown & Brown of Massachusetts LLC, a subsidiary of Florida-based Brown & Brown, for $41.5 million, less $1.6 million for executive goodwill purchase price payments, Berkshire said in an SEC filing yesterday.
“Consistent with Berkshire’s Exciting Strategic Transformation (BEST) program, this transaction allows us to simplify our operating model, repurpose valuable resources and redeploy capital to support core businesses and strategic initiatives that will enhance long term stakeholder value,” Berkshire CEO Nitin Mhatre said in a statement yesterday.
Mhatre added that Berkshire would record a net gain on sale of approximately $0.55 per share in the third quarter and anticipated $0.02 lower earnings per share in the second half of 2021. The transaction is expected to be completed in the third quarter.
Berkshire Insurance Group was established in 2000 and provides personal and commercial property and casualty insurance solutions. Berkshire Bank had $5.4 million in insurance commissions and fees in the first six months of 2021, according to the bank’s quarterly report, about 11 percent of its total noninterest income. The insurance commissions and fees between January and June dropped about 6 percent year-over-year.
The transaction will not result in any immediate job losses as Brown & Brown has offered positions to all existing BIG employees, the bank said in the statement.
Following the acquisition, BIG will become a new stand-alone operation within Brown & Brown’s retail segment led by John Flaherty, who currently leads BIG. Don McGowan, a regional president in Brown & Brown’s retail segment, will oversee the combined operations.
BIG’s offices in Greenfield, Longmeadow, Pittsfield, Stockbridge and Westfield will continue to operate. Other locations in Great Barrington, Shelburne Falls and Springfield will combine with existing Brown & Brown offices.
Berkshire Bank said it will refer its customers to Brown & Brown through a partner relationship.
Sean Gray, president and chief operating officer of Berkshire Bank, said in the statement that the partnership with Brown & Brown would provide Berkshire’s customers with an expanded offering of insurance solutions. Gray also praised BIG’s employees.
“I also want to thank the dedicated team of employees at BIG, whom I’ve had the privilege of working alongside for the past ten years, for their contributions to Berkshire and all our communities,” Gray said. “I know they will continue to serve Berkshire customers well in their new roles with Brown & Brown.”
Berkshire in a separate statement today announced changes to its board of directors. Board Chair J. Williar “Bill” Dunlaevy will retire from the joint board of directors of the parent company and the bank effective Sept. 22.
The board unanimously voted to appoint David M. Brunelle as chairperson as part of a pre-established succession plan. Brunelle is the co-founder and managing director of North Pointe Wealth Management in Worcester. He was previously a board member of Commerce Bancshares Corp. and Commerce Bank & Trust Company and joined Berkshire’s board in 2017 when Berkshire acquired Commerce.
A new member was also added to the board. Jeffrey W. Kip, CEO of Angi International, was elected to fill the vacancy created by Dunlaevy’s retirement.
Dunlaevy was previously CEO of Legacy Bancorp and Legacy Banks, which merged with Berkshire in 2011. He had been board chair since 2019.
“With our new CEO and revitalized management team in place, the strength of our board and our Berkshire’s Exciting Strategic Transformation (BEST) plan, the company is well positioned for the future,” Dunlaevy said in the statement. “As I retire from the board, I have great confidence that Dave Brunelle will continue to bring valuable insights, high ethical standards and strong leadership that will help management achieve the BEST plan and deliver meaningful returns for our shareholders and resources for our communities.”
Mhatre thanked Dunlaevy for his commitment to Berkshire Bank.
“In his ten years on the Board and past two as Chairperson, he has helped guide Berkshire through numerous strategic decisions always with a keen focus on fulfilling our mission and enhancing stakeholder value,” Mhatre said. “As Bill retires from the board, we are fortunate to have Dave step into the role of chairperson. He understands our business, our culture, commitment to our communities and focus on improving financial performance through our Berkshire’s Exciting Strategic Transformation (BEST) plan.”
