18/12/2015 - 11:28

Strathearn sold to US firm

18/12/2015 - 11:28

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Strathearn Insurance Brokers has become the second big player in the sector to change hands this year, after US-based Arthur J Gallagher acquired the Perth firm for an estimated $60 million.

Strathearn CEO Paul Harvey (left) with co-founders Ron Fuller and Ted Hicks (seated).

Strathearn Insurance Brokers has become the second big player in the sector to change hands this year, after US-based Arthur J Gallagher & Company acquired the Perth firm for an estimated $60 million.

The sale comes 22 years after Ron Fuller, Ted Hicks and Ian Winter established Strathearn, and eight years after listed company AUB Group (formerly Austbrokers Holdings) bought a 49.9 per cent stake.

The majority equity stake had been retained by about 20 directors and staff.

The sale has occurred at a time when the founders were winding down their involvement, with Brisbane-based chief executive Paul Harvey responsible for day-to-day running of the business.

Strathearn will continue to operate out of its current locations in Perth, Brisbane, Sydney and Adelaide, and over the next 12 months will integrate with Gallagher.

The acquisition comes 18 months after Gallagher made a big push into the Australian market, through its $1.01 billion purchase of Wesfarmers’ insurance business, including OAMPS Insurance Brokers.

The combined firm will be Western Australia’s second largest insurance broker, according to BNiQ data compiled by Business News.

Gallagher currently has 50 brokers in WA (after rebranding OAMPS last December) while Strathearn, which focuses on large private and corporate business, has 42 brokers.

Assuming all brokers stay with the merged group, Gallagher will overtake local firm EBM (88 brokers) but remain short of market leader Jardine Lloyd Thompson (115 brokers).

Arthur J Gallagher’s Australia and New Zealand managing director Steven Lockwood said the firm was continuing to look out for acquisition opportunities.

“We are very serious about becoming Australia’s largest and most admired broking operation,” he said.

“Strathearn brings to us the best local talent and reputation and we bring to them one of the world’s most ethical companies and global market strength.

“That is a potent combination, and is very good for our clients.”

The parties did not disclose the sale price.

However AUB said it would realise an after-tax profit on the sale of approximately $5.9 million, and its latest annual report included an equity accounted carrying value for its 49.9 per cent Strathearn stake of $21.2 million.

In a research note, Macquarie Securities analyst Adam Simpson said this implies a sale price of approximately $30 million.

Assuming the directors sold their equity for a similar amount, Gallagher would have paid about $60 million.

AUB said it is generally not a seller of businesses but pursues such opportunities in circumstances where optimisation of its portfolio and returns can be achieved.

The Strathearn deal comes four months after another local player CKA Risk Solutions was bought by global player Willis Group Holdings.

The combined Willis CKA business is ranked number four in WA, with 75 brokers, according to the BNiQ listing.

 

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