Berkshire Hills Bancorp in Boston has agreed to sell its insurance business to Brown & Brown in Daytona Beach, Fla.
The $12.3 billion-asset Berkshire said in a press release Tuesday that it will sell the assets and operations of Berkshire Insurance Group for $41.5 million. The deal is expected to close by the end of September.
The insurance business, formed in 2000, offers personal and commercial property-and-casualty insurance.
Berkshire will record a net gain on sale of roughly 55 cents a share in the third quarter. The sale will also lower earnings per share in the second half of this year by 2 cents.
Brown & Brown has offered positions to existing employees of the insurance business. Through a partner relationship, Berkshire will continue to refer customers to Brown & Brown.
“While we readily acknowledge that the company is reducing fee income, which investors often prefer to spread income, we also recognize this was a subscale business with mediocre returns,” Mark Fitzgibbon, an analyst at Piper Sandler, wrote in a client note.
“This transaction strikes us as quite logical,” Fitzgibbon added.
RBC Capital Markets and Luse Gorman advised Berkshire.