NU Online News Service, May 13, 3:15 p.m. EDT

Arthur J. Gallagher pulled off a major acquisition in London, acquiring Heath Lambert Group Holdings, Ltd. for $158 million.

“This acquisition represents an important strategic move for our company,” says J. Patrick Gallagher Jr., chairman, president and chief executive officer of AJG in a statement. “Since 1974, we've been in London primarily as a wholesale broker. Now, Heath Lambert offers us an excellent opportunity to become a large retail broker in one of the best insurance markets in the world. Their highly skilled team shares our culture and their complementary product and service capabilities are an excellent fit with our U.S. and expanding international retail operations.”

In a separate statement, Adrian Colosso, Heath Lambert's CEO, comments, “Heath Lambert complements AJG with a strong, well-respected and customer-focused retail operation that aims to deliver continued success focused on, primarily, UK-based businesses and individuals.”

Established in 1877, Heath Lambert brokers nearly all lines of property and casualty and employee benefit insurance products through 1,200 professionals in 16 offices. Arthur J. Gallagher International has 20 offices in 16 different countries around the world. The combined group will employ more than 1,800 people.

AJG says the deal will expand its United Kingdom capabilities in the areas of fine art specie, real estate, employee benefits, major construction, entertainment, affinity relationships and public sector businesses. It also expands the firm's benefits consultancy and advisory services.

The firm will also have increased access to “a wide range of retail clients from large corporations and advisory services.”

AJG says that the transaction should generate approximately $158 million in annualized revenue. Over a two-year integration period the firm expects Heath Lambert to break even financially in 2011 and contribute about $20 million in 2012. That should rise to $33 million by 2013 AJG says.

The net purchase price of $158 million was funded entirely with cash, according to AJG.

AJG International says that Colosso will continue to oversee retail operations in the UK, reporting to David Ross, CEO of Arthur J. Gallagher International.

In an analyst's note, Meyer Shields with Stifel Nicolaus says with this acquisition AJG is one step closer to “becoming a global broker, diversifying the company away from the United States.”

A spokesperson for AJG says this transaction does not alter the firm's strategy to focus on acquiring middle market agencies and brokers.

Earlier this week, the Itasca, Ill.-based firm says it acquired Meyers-Reynolds & Associates, Inc. headquartered in Oklahoma City, Okla.

Financial terms of the transaction were not released.

Formed in 1985, Meyers-Reynolds & Associates is a retail insurance broker providing commercial property and casualty insurance products and risk management services to their clients worldwide. They specialize in insurance programs for the utility and power generation and energy industries.