First Niagara Financial Group said Tuesday it bought a state-certified workers' compensation PPO from Rochester-based Excellus Health Plan in the bank's first purchase of a preferred provider organization.
The acquisition of Business Works expands the products and services that First Niagara Risk Management, the bank's insurance subsidiary, can provide to clients in Erie and Monroe counties.
At the same time, it strengthens First Niagara's ability to help businesses control workers' compensation costs -- which in New York are the highest in the country, said Joseph Teresi, chief executive officer of the insurance unit.
Lockport-based First Niagara did not say how much it paid to buy Business Works from Genesee Valley Group Health Association, an Excellus unit. But "in light of other transactions we've conducted, this was on the smaller side," said spokeswoman Leslie Garrity.
The deal marks the latest effort to grow First Niagara Risk Management through a series of acquisitions that have already made it the largest insurance agency in upstate New York. The division's revenues rose 6 percent to $46.2 million in 2007, ranking it 58th in the country among the nation's largest agencies and brokerages according to Business Insurance magazine.
The transaction closed just as First Niagara completed a $109 million stock offering designed to bolster its capital levels in anticipation that regulators will demand more capital of banks.
The bank already exceeded regulatory capital requirements, but the money can also be used as an acquisition war-chest. The offering proceeds were not used to buy Business Works because the deal already was completed, Garrity said.
Now renamed as First Niagara Business Works and still operating under state oversight, the new program helps employers manage claims by matching nurse case managers with providers in its network.
The case managers arrange all medical appointments, coordinate treatment plans and identify options for quickly returning the employee to work. For injured employees, the network offers access to occupational health providers.
Business Works has been in business for more than 11 years, and said it had cut employer workers' compensation costs by more than 50 percent while maintaining a 95 percent satisfaction rate among workers.
It is currently approved to operate only in Erie and Monroe counties, where its network has 123 and 174 medical providers, respectively.