Insurance broker NFP Corp. to sell its indie broker-dealer unit

The firm is selling a majority stake of NFP Advisor Services to funds managed by private equity shop Stone Point Capital

Apr 4, 2016 @ 3:52 pm

By Bruce Kelly

Yet another insurance company is getting out of the broker-dealer business.

NFP Corp., a leading insurance broker and consultant, on Monday said it was selling a majority stake of its independent broker-dealer, NFP Advisor Services, to funds managed by private equity shop Stone Point Capital. In connection with the transaction, NFP Advisor Services will change its name to Kestra Financial, according to a statement from the companies involved.

Based in Austin, NFP Advisor Services in 2015 reported $452.5 million in total revenues and had 1,383 producing registered representatives and advisers, according to this year's InvestmentNews survey of independent broker-dealers. The terms of the deal were not disclosed in the statement.

Madison Dearborn, a private equity firm, acquired NFP for $1.3 billion in 2013.

According to the statement, NFP's parent “will maintain a substantial minority ownership stake.”

Two decades ago, the insurance industry became enamored with independent broker-dealers as they looked for new ways to distribute their products. The risk associated with securities dealers during and after the credit crisis decreased insurance companies' appetite for independent broker-dealers. Dutch insurer ING AV sold its U.S. retail financial advice business, and Ameriprise Financial Inc., the asset manager and insurance giant, sold its independent broker-dealer Securities America Inc.

Now, the Department of Labor's pending fiduciary rule, which many expect to be released this week, is also hastening the departure of some insurance companies from the retail financial advice industry.

For example, American International Group Inc. in January said it was selling the AIG Advisor Group to private-equity firm Lightyear Capital and Canadian pension manager PSP Investments. “It's a business we are not the best owner of, in light of potential Department of Labor rules,” Peter Hancock, chief executive of AIG, said at the time. At the end of February, MetLife Inc. said it was selling its U.S. adviser unit to Massachusetts Mutual Life Insurance Co.

The sale of NFP Advisor Services to a private equity firm was not related to the coming DOL fiduciary rule, said James Poer, the president and CEO of the broker-dealer. “What's driving the event is growth on the two sides of the business, the brokerage and insurance consulting sides,” he said. “They will grow better by being separate.”

He said that the new name of the firm, Kestra Financial, is derived from the kestrel or sparrow hawk, which is known for its speed, nimbleness and vision. “It's not your standard three letters,” Mr. Poer noted.

The agreement between NFP and Stone Point ensures a sustained relationship between NFP and its adviser group, the newly rechristened Kestra, according to a press release. NFP chairman and CEO Douglas Hammond will serve as a member of Kestra's board. Additionally, NFP and Kestra have entered into long-term reciprocal agreements for Kestra to serve as the preferred broker-dealer and registered investment adviser for NFP offices and membership organizations.

NFP has had a noted Wall Street pedigree. Jessica Bibliowicz, the daughter of Sandy Weill, was the company's chief executive from 1999 until after the sale to Madison Dearborn.


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