Gallagher's $13.5 billion AssuredPartners deal strengthens its US insurance broker business

By Pritam Biswas and Arasu Kannagi Basil

(Reuters) -Arthur J Gallagher said on Monday it would acquire insurance broker AssuredPartners in an all-cash deal worth $13.45 billion, as it deepens focus on property and casualty and employee benefits across the U.S.

Gallagher follows in the footsteps of rivals Aon (NYSE:AON ) and Marsh McLennan (NYSE:MMC ), which have struck $13 billion and $7.75 billion, deals, respectively, over the last year to expand into the vast and fast-growing middle-market insurance business.

Middle-market insurance caters to mid-sized businesses that generate annual revenue between $10 million and $1 billion.

The Insurer, a Reuters publication, exclusively reported on Sunday that Gallagher was close to a deal for AssuredPartners.

The broad U.S. footprint and middle-market focus of AssuredPartners make it an ideal merger partner, said Gallagher CEO Pat Gallagher.

Douglas Howell, chief financial officer of Gallagher, told analysts that the company had the opportunity to compare notes with AssuredPartners last year.

At one point, AssuredPartners decided it wanted to do an initial public offering, Howell said, adding that the deal came back on over the last six weeks with no investment bankers involved.

Gallagher said the deal's net consideration was about $12.45 billion, reflecting about $1 billion deferred tax asset. Shares of the Illinois-based company dipped 0.4%.

Private equity firm GTCR — which founded AssuredPartners in partnership with insurance industry veteran Jim Henderson — said the deal was the largest sale of a U.S. insurance broker to a strategic acquirer in the industry's history.

AssuredPartners distributes insurance across property and casualty, commercial, employee benefits and personal lines. It generated $2.9 billion in adjusted revenue for the 12 months ended Sept. 30.

GTCR initially owned AssuredPartners from its inception in 2011 till 2015, when it sold the Florida-based company to private equity firm Apax (HN:IBC ) Partners.

In 2019, an investor group led by GTCR agreed to acquire it from Apax, which retained a minority stake in the company.

The deal with Gallagher is expected to close during the first quarter of 2025.



The company expects to finance the transaction through a mix of cash, debt and equity. Separately, it unveiled an $8.5 billion stock offering to fund the acquisition and secured a $13.45 billion short-term loan.

The deal is expected to boost Gallagher's adjusted profit by double digit. It will also increase the company's U.S. retail niche revenue across agriculture, aerospace, construction, real estate, transportation and government contractors and bolster its business in the UK and Ireland.

Source: Investing.com