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AIG buys Oakdale's Woodbury Financial

  • Article by: JENNIFER BJORHUS
  • Star Tribune
  • July 31, 2012 - 8:34 PM

Insurance giant American International Group Inc. has bought Woodbury Financial Services, a large financial services firm based in Oakdale.

AIG's life and retirement business, SunAmerica Financial Group Inc., has signed an agreement with the Hartford Financial Services Group to acquire its Woodbury unit, AIG said in a release announcing the deal Tuesday.

Terms of the acquisition, expected to close by the end of the year, were not disclosed.

A Wall Street Journal report said New York-based AIG is paying up to $90 million for Woodbury, a price that could be revised down to as low as $37.5 million if Woodbury doesn't meet certain revenue targets before the deal closes.

AIG will also pay $25 million over the two years following the sale, if Woodbury meets certain performance targets. Hartford, based in Hartford, Conn., will receive a $25 million dividend from Woodbury when the sale closes.

The companies said they don't expect the new ownership to result in any layoffs or closings.

Woodbury Financial had revenue of $254 million last year, making it the No. 23 broker-dealer by revenue, the company said. It has 1,400 registered representatives around the country, and 200 people in its Oakdale headquarters. Woodbury sells insurance, mutual funds, annuities and stocks and bonds, with about 12 percent of its revenue coming from insurance products.

Selling Woodbury is the first of three planned transactions that Hartford announced in March as it reorganizes to focus on its property and casualty, group benefits and mutual funds business lines, Hartford said in its release. In the release, Hartford CEO Liam McGee called Woodbury Financial "one of the most respected broker-dealers in the United States."

"The firm will transition to a buyer who recognizes the strengths of the business and the talent of the people, and is committed to the independent financial adviser," McGee said.

The transaction will generate a modest gain for Hartford and have no material impact on its 2013 earnings, it said.

Patrick H. McEvoy, who has run Woodbury Financial since 2009, will remain chairman, president and CEO.

Woodbury will be operated as one of four independent broker-dealers in SunAmerica Financial Group's Advisor Group network, one of the country's largest networks of independent broker-dealers. Woodbury's registered representatives will continue to operate under the Woodbury Financial brand.

In an interview, McEvoy called the Woodbury-AIG union a good fit. It gives Woodbury the independence it wanted, but also the resources "that could close the gaps that we were challenged with." Those gaps included access to enhanced technology and deeper business resources.

"We were looking for somebody that would appreciate the fact that we've got a great culture here," McEvoy said. "The independence of Woodbury will be continued."

He called SunAmerica's Advisor Group "a well-positioned, very dedicated organization supporting independent broker-dealers."

The sale comes amid consolidation in the broker-dealer industry as companies struggle with increased regulation, among other things.

Jennifer Bjorhus • 612-673-4683

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