Wesfarmers brokers sale goes official

Acquisition

Arthur J Gallagher (AJG) has confirmed OAMPS will eventually take the AJG name, with the broking giant’s purchase of Wesfarmers’ broking and premium funding operations being completed today.

Wesfarmers announced in April that it would spend $1.01 billion to buy OAMPS and New Zealand’s Crombie Lockwood, as well as Wesfarmers’ premium funding operations. Although no time frame has been set, the entities will be eventually merged into a united operation, reporting to current Wesfarmers Insurance Broking executive Chairman Steve Lockwood.

AJG Chairman, President and CEO Pat Gallagher Jr told IRP although both broking operations would be renamed, changes to their operations would be largely superficial.

“We don’t change their culture because we only align ourselves with those that share our culture,” he says. “We only align ourselves with the best teams in the world that have the right culture to be a fit with us,” he says.

“With OAMPs and Crombie Lockwood having been locked up in Wesfarmers, our people were ecstatic to have them even entertain our offer. They are two of the most well-known and respected brands in the marketplace.”

The merger takes AJG’s Australasian operation to about 2500 people. Globally, AJG employs more than 13,000 people in 17 countries, and is active in many more.

The Wesfarmers acquisition is just one part of a strategy to greatly expand AJG’s presence in Australia, Gallagher says. Earlier this year, the firm purchased UK broker the Oval Group for almost £200 million, as well as a specialist broker in New Zealand.

Gallagher says striving for growth is part of the firm’s make-up. “We are very strong in organic growth,” he says. “Every day, every week, every quarter, it’s something we focus on. You do that by keeping your customers happy and finding new opportunities. We are very aggressive when it comes to sales and marketing.”

Acquisitions, too, are a key part of AJG’s growth strategy. “We made 60 acquisitions in 2012, or more than one a week,” Gallagher says. “They were small transactions but they bought us very good business partners.”

Although AJG has previously made local acquisitions – such as specialised Broking Associates in 2008 – Gallagher says the relatively small size of the deals has not delivered a high enough profile to attract attention from the sort of brokerages it wishes to do business with. “This deal will bring us a platform to connect with the right sort of partners,” he says.

For Gallagher, the enormously fragmented nature of the broking industry means enormous potential.

“I always say to our people our ability to grow is literally limitless,” he says. For example, in the US, there are an estimated 18,000 brokerages, with the largest of them controlling only 20% of the market. Once OAMPs joins with AJG, they will still have just a 5% market share.

“There is plenty of room to grow,” Gallagher says.