A Historic Acquisition
Arthur J. Gallagher & Co. (AJG), a global leader in insurance brokerage and risk management, has announced its agreement to acquire AssuredPartners in an all-cash transaction valued at $13.45 billion. This monumental deal, once finalized, will mark the largest sale of a U.S.-based insurance broker to a strategic acquirer, solidifying Gallagher’s position as a dominant force in the industry.
The acquisition of AssuredPartners is a bold strategic move for Gallagher, significantly enhancing its footprint in the U.S. middle-market property and casualty (P&C) insurance and employee benefits sectors. AssuredPartners, headquartered in Orlando, Florida, ranks as the 11th largest insurance broker in the United States and has cultivated a strong presence through its 400 offices across North America, the United Kingdom, and Ireland. With an experienced team of 10,900 professionals, AssuredPartners serves a diverse clientele, offering risk management solutions for commercial enterprises, public institutions, and high-net-worth individuals.
The deal represents a gross consideration of $13.45 billion, with a net transaction value of approximately $12.45 billion after accounting for a $1 billion deferred tax asset. Gallagher plans to finance the acquisition through a mix of long-term debt, short-term borrowings, cash reserves, and common equity. To support this financing, Gallagher has announced an $8.5 billion stock offering and secured a $13.45 billion short-term loan.
This acquisition is expected to provide substantial financial benefits for Gallagher, with projections indicating double-digit growth in adjusted profits within the first year of the transaction’s completion. The company also anticipates realizing approximately $160 million in cost synergies over the next three years, despite incurring $500 million in integration costs, including $200 million in non-cash retention awards.
Enhancing Capabilities and Expanding Market Presence
By integrating AssuredPartners into its operations, Gallagher will deepen its focus on the middle-market insurance space, a rapidly growing segment catering to businesses generating annual revenues between $10 million and $1 billion. AssuredPartners’ expertise, particularly in niche sectors like transportation, energy, healthcare, government contractors, and public entities, aligns seamlessly with Gallagher’s strategic goals.
This acquisition also supports Gallagher’s “tuck-in” merger and acquisition strategy, allowing the company to expand its wholesale, reinsurance, and claims management services while bolstering its operations in the UK and Ireland. Furthermore, Gallagher intends to leverage its robust investments in data analytics and specialty products to enhance client services and strengthen AssuredPartners' presence in local markets.
Patrick Gallagher Jr., CEO and Chairman of Arthur J. Gallagher & Co., emphasized the compatibility between the two companies. He praised AssuredPartners’ entrepreneurial spirit and middle-market focus, which he believes make it an ideal partner for driving growth and innovation. “By further leveraging our deep industry verticals, investments in data and analytics, access to specialty products, and standardized service model, we can provide even more value to clients and position Gallagher for future growth,” Gallagher stated.
The Journey and Growth Story of AssuredPartners
Founded in 2011 by private equity firm GTCR and insurance veteran Jim Henderson, AssuredPartners has experienced remarkable growth in just over a decade. Initially owned by GTCR, the firm changed hands in 2015 when Apax Partners became its primary owner. In 2019, GTCR reacquired the company in partnership with an investor group, allowing Apax to retain a minority stake.
Under the leadership of CEO Randy Larsen, AssuredPartners has built a reputation for its client-focused approach and comprehensive suite of risk management solutions. The company generated $2.9 billion in adjusted revenue and $938 million in EBITDAC (earnings before interest, taxes, depreciation, amortization, and coronavirus-related adjustments) in the 12 months ending September 30, 2024.
Larsen described the acquisition as a transformative milestone for AssuredPartners, highlighting the combined resources and expertise that the partnership with Gallagher will bring. He noted that the integration of the two companies would empower employees and enable them to better serve clients. Jim Henderson, the company’s executive chairman, reflected on AssuredPartners’ journey, expressing pride in how far the organization has come since its inception.
Competitors and Industry Presence
This acquisition follows a recent trend of significant mergers in the insurance brokerage sector. Gallagher joins the ranks of competitors like Aon and Marsh McLennan, which have completed major transactions to expand their middle-market operations. In September, Marsh McLennan announced its acquisition of McGriff Insurance Services for $7.75 billion, reinforcing the competitive dynamics in this lucrative segment.
Middle-market insurance remains a critical area of growth for brokers, as mid-sized businesses seek tailored solutions to address their complex risk management needs. By acquiring AssuredPartners, Gallagher not only reinforces its leadership in this space but also sets a new benchmark for strategic acquisitions within the industry.
Pending Approval
The transaction, subject to regulatory approvals and customary closing conditions, is expected to be finalized in the first quarter of 2025. Once completed, this historic acquisition will significantly enhance Gallagher’s scale, expertise, and talent pool. It will also position the company to capitalize on new opportunities, driven by its expanded capabilities and reinforced market presence.
Gallagher’s leadership has expressed confidence in the long-term benefits of this deal, highlighting its alignment with the company’s growth strategy and commitment to delivering exceptional value to clients. As the insurance industry continues to evolve, the Gallagher-AssuredPartners merger represents a pivotal moment, underscoring the importance of innovation, collaboration, and strategic vision in shaping the future of the sector.
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