Aon Corp. Expands through Purchase of Gallagher Re’s U.S. and U.K. Insurance Brokerage Business |
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Written by U.S. Insurance News
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Monday, 03 March 2008 |
The reinsurance brokerage industry has consolidated just a bit.
Aon Corporation has agreed to acquire Illinois-based Gallagher Re’s U.S. and U.K. reinsurance brokerage business. Additionally, professionals from Gallagher Re, based in the United States and the United Kingdom, will join Aon Re Global, the top reinsurance intermediary.
According to Michael D. O’Halleran, executive chairman of Aon Re Global, his company will now have a “significantly larger presence” in the U.S. accident, health, and life markets and improved capabilities in the U.K. specialty, casualty, and financial institutions business.
“Gallagher Re has invested significantly in index-based capital markets solutions, which align well with our integrated capital solutions strategy and which will add to our industry-leading Aon Capital Markets team,” O’Halleran said. “We will be able to utilize our scale in accounts, analytics, and services to drive innovation and significantly improve margins over a larger base, delivering immediate impact to our clients.”
The definitive agreement includes an initial payment of about $30 million in cash and an additional cash payment—potentially $15 million—for revenues generated in the year following the close of the transaction. The U.S. portion of the transaction was completed on Feb. 22. The UK portion will be finalized when all regulatory requirements are met, which is expected to be on or before April 30.
In the first quarter of 2008, and presented as a component of discontinued operations, Gallagher will record its best estimate of the sales proceeds and related charges as follows (in millions):
- Estimated sales proceeds $38
- Non-cash loss on sale $(40)
- Cash loss on sale $(20)
- Net pretax loss on sale $(22)
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