Insurance broker Lockton Inc., Kansas City, Mo., said it will expand its operations internationally and acquire the London-based brokerage business of Alexander Forbes Limited for $170 million.
John L. Lumelleau, Lockton's chief executive officer, said the all-cash transaction is another step for the company that views itself as an alternative to larger global insurance brokers. The deal is expected to be completed by the end of October of this year.
Currently, Lockton has 14 locations throughout the United States in all the major cities. With the announcement of this acquisition, it now “has a global platform to make the kind of investments that will allow us to extend our base to our clients around the world and deliver our high level of service,” he said.
The deal would combine $409 million of Lockton's 2005-2006 revenues and 2,100 people with Alexander Forbes $202 million in revenue and staff of 1,600 people, for a combined $611 million and worldwide staff of 3,700. It will now serve clients from 142 local offices in 43 countries.
Mr. Lumelleau said there will be no overlap in professionals or services, which would result in reduction in staff.
The deal does not involve Alexander Forbes' International Financial Services business.
In company statements, Lockton and Alexander Forbes said the companies have worked together to place business in the past, but this is a new opportunity to combine efforts.
“We see this as a growth opportunity in terms of both revenue and people,” said Mr. Lumelleau.
He said besides expanding the firm's geographic reach, it would also complement a number of niche businesses and open new opportunities such as in marine and professional liability insurance in Europe, primarily errors and omissions for attorneys.
The Alexander Forbes business will be renamed Lockton International Holdings Limited and remain based in London.
Mike Hammond, deputy chairman of Alexander Forbes Insurance, will become executive chairman of Lockton International. John Percy-Davis, executive chairman of Alexander Forbes, will remain in his position as chairman of EOS RISQ, the European broker partnership, and continue to work closely with Lockton.
Lockton will hold majority ownership in Lockton International, with minority investment from management and Trident III, L.P., an investment fund managed by Stone Point Capital, LLC of Greenwich, Conn.
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