US-based broker Arthur J Gallagher has purchased the broking and premium funding units of Australian conglomerate Wesfarmers’ for £560m (A$1.01bn).
The deal will see OAMPS Insurance Brokers in Australia, OAMPS UK and Crombie Lockwood in New Zealand become part of the growing Gallagher presence in the region.
Wesfarmers will also receive about £84m to repay funding of its premium funding operations.
The company expects to record a mid-year pre-tax gain of between £173m and £196m from the Gallagher deal.
Gallgher said the Wesfarmers insurance broking unit reported £187m in revenue in the year ended June 30, 2013.
The Gallagher deal comes four months after Wesfarmers announced the sale of its insurance underwriting business to Insurance Australia Group Ltd (IAG) for £1.04bn.
"The businesses have been good businesses for Insurance Australia Group, and Gallagher, but there are some aspects of the business we think that they will be better able to run than we were," Wesfarmers Managing Director Richard Goyder said in a telephone interview with Reuters, without elaborating.
The Australian conglomerate has said it is exiting the insurance business entirely to focus on the retail sectors of its business.
Comment: The move by Arthur J Gallagher into the Australian broking market is significant from the perspectives of both Gallagher and Australia. CEO Pat Gallagher said that the acquisition gave the broker "a tremendous platform for growth as we expand throughout Australasia". The deal also makes Gallagher one of the largest insurance brokers in the ANZ region.
Having announced only last week the acquisition of the OVAL broking network, this latest deal also gives it ownership of OAMPS, a South-of-England broking network that offers general coverage as well as a specialisation in petrochemicals and special risks via a Lloyd's brokerage