Gallagher international chief executive wants to be the best distributor AND underwriter in the world

Hiring RSA veteran Adrian Brown will be as transformative for Arthur J Gallagher as its £199m purchase of Oval, according to international chief executive David Ross.

RSA’s UK chief executive will join as executive chairman of distribution and underwriting later this year. He is charged with growing its personal lines, private clients and underwriting divisions.

Gallagher’s international underwriting business has mushroomed from controlling $35m in gross written premium just five years ago to $800m (£476m) this year.

“We see this space, despite its growth, as probably one of the most underdeveloped and highest potential areas we’ve got,” Ross told Insurance Times.

“We’re not hiring Adrian Brown to stand still.”

In the UK, Gallagher’s managing general agent underwrites around £140m in premium for home insurance, and £200m in SME premium.

With Giles and Oval – the two major retail brokers it bought in the last six months – it is on track to grow the total UK book to £450m this year. The broker wants its MGA to be good enough to recommend to more of its clients.

“The real challenge is to bring the MGA arm up to scale to match the distribution business we now have at our disposal for transactional business,” Ross said.

Distribution king

Ross said managing the cost of capital was becoming as important as distribution to insurance companies in the changing market, and hinted that Gallagher’s MGA would become increasingly attractive to insurers looking to keep a lid costs.

“If you can provide a platform that combines terrific distribution working for the client, but with an in-house underwriting vehicle that can work for the capital provider, then an entity that has a low cost of capital base can find a place like Gallagher to be a very effective partner to access the client on their behalf,” he said.

“Our priority is to get the best deal for the client but we also want the market to make money, because we want a sustainable product for our customers,” he added.

Ross said Gallagher’s acquisitions in 2012 were focused on distribution through affinity partnerships and schemes, with last year focused on harnessing retail distribution.

“Our ambition is now to establish ourselves as a market leading underwriting and distributing player worldwide,” Ross said.

“The hire of Adrian was as quantum a leap as buying Oval was.”