9th December 2024
Arthur J. Gallagher & Co. today announced it has signed a definitive agreement to acquire AssuredPartners, a US insurance broker with client capabilities across commercial property/casualty, specialty, employee benefits and personal lines, for a gross consideration of $13.45 billion from GTCR.
The transaction is considered the largest sale of a US insurance broker to a strategic acquiror in the history of the industry. It is subject to customary regulatory approvals and is expected to close during the first quarter of 2025.
After factoring in tax benefits and expected cost savings from combining operations, the final net consideration is approximately $12.45 billion.
Gallagher plans to pay for the acquisition using a combination of long-term debt, short-term borrowings, free cash, and common equity.
The company emphasized that this deal will not affect its ability to continue acquiring smaller businesses and maintain its strong credit rating.
The merger is expected to generate significant cost savings, estimated at around $160 million. However, Gallagher anticipates spending about $500 million to integrate the two companies, this includes including $200 million of non-cash retention awards, over the next 3 years.
Despite these integration costs, Gallagher expects the acquisition to boost its earnings per share by 10% to 12% within the next year.
J. Patrick Gallagher, Jr., Chairman and CEO, said: “We have held in high regard the fast-growing AssuredPartners franchise since its founding in 2011. AssuredPartners’ entrepreneurial spirit, broad U.S. footprint and middle-market focus make them an ideal merger partner for Gallagher.
“By further leveraging our deep industry verticals, investments in data and analytics, access to specialty products, our common systems and standardized service model, together we can provide even more value to clients and further position Gallagher for future growth. I look forward to welcoming the 10,900 AssuredPartners colleagues to our growing Gallagher family of professionals.”
The acquisition is expected to deliver numerous benefits, including expanding Gallagher’s presence in the US middle-market for property/casualty and employee benefits. As well as Building on new business opportunities by leveraging Gallagher’s expertise, data and analytics and expansive product offerings.
Additionally, the acquisition will deepen Gallagher’s specialization in niche sectors like Transportation, Energy, Healthcare, Government Contractors, and Public Entity.
Furthermore, this acquisition supports Gallagher’s “tuck-in” M&A strategy, as well as creating new opportunities for its wholesale, reinsurance, and claims management businesses.
The move also brings increased scale, expertise, and talent to Gallagher’s operations in the UK and Ireland. It also combines two highly compatible, entrepreneurial, and sales-driven organizations with strong local ties and a shared focus on growth and client service, the firms noted.
Finally, on top of its expected financial returns, the acquisition also adds a team of seasoned insurance industry leaders to Gallagher.
The sale marks the successful culmination of a 13-year partnership between GTCR and AssuredPartners, initiated as a Leaders Strategy™ Partnership with the experienced insurance industry leader, Jim Henderson.
Randy Larsen, CEO of AssuredPartners commented: “This marks a significant milestone in AssuredPartners’ journey, showcasing the outstanding business we’ve built and strong growth we’ve experienced in just over a decade. With Gallagher, we bring together not only unparalleled global resources and expert insights but also a team of exceptional employees whose expertise and dedication have been the driving force behind our success. I am excited for our future together.”
Henderson added: “When we started AssuredPartners, I could never have imagined how far we would come. What started as a small team with a big vision has grown into an extraordinary organization, built on a foundation dedicated to our clients, our culture, and our people.”
