Gallagher issues £77m bond to fund acquisition plans

AJ Gallagher International (AJGI) has acquired an Essex-based managing general agency (MGA), as negotiations continue over a deal to buy Heath Lambert.

The MGA, called Woodbrook Underwriting Agencies, writes around £50m and will be headed up by Sian Fisher. Fisher is managing director of Gallagher’s other MGA, called OIM, which was acquired in 2008.

The acquisition of Woodbrook represents the first major phase of a push into the retail broking arena by AJGI chief executive David Ross.

The two MGAs will fall under the umbrella of a new division called Arthur J Gallagher International Underwriting Group.

Fisher said that Woodbrook would deal mainly with retail brokers on a transactional basis, and OIM would work with smaller managing general agencies and wholesale brokers.

OIM underwrites the smaller end of SME, while Woodbrook underwrites facultative and property for larger corporate business, Fisher added.

As Insurance Times went to press (Tuesday), Gallagher was set to exchange contracts by the end of the day.

Sources speculated that Arthur J Gallagher International Underwriting Group will be used as a funnel for business placed by Heath Lambert.

To fund M&A deals, AJGI’s parent Arthur J Gallagher raised $125m (£77.3m) through a bond issue on 10 February. A considerable portion of the bond money raised is likely to be spent on Heath Lambert, which could cost anywhere between £80m and £100m on current market valuations. But Insurance Times understands that the negotiations between AJGI and Heath Lambert are still ongoing.

A deal would give wholesale specialist AJGI considerable might in the retail market, bringing it in line with its bigger US parent.

In a busy week for AJGI, it was also announced that former Jardine Lloyd Thompson chairman Andrew Agnew is to become its new chairman on 1 May.