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LOCKTON, INC. TO ACQUIRE LONDON-BASED ALEXANDER FORBES INTERNATIONAL RISK SERVICES
Creates independent insurance brokerage powerhouse with $600 million in revenues and local client support on four continents
London, August 21, 2006 — Lockton, Inc. today announced that it has reached a definitive agreement to purchase Alexander Forbes International Risk Services, the international brokerage operation of Alexander Forbes Limited [JSE: ALEXFBS], the world's ninth largest insurance broker. The $170 million (£90.2 million) transaction will make Lockton the largest independent, privately owned global insurance broker.
The combined business will have more than $600 million in revenues and 3,700 professionals with locations in Europe, North America, Latin America and Asia. Alexander Forbes International Risk Services' operation, in combination with its position in the European broker partnership EOS RISQ, gives Lockton the ability to serve clients from 142 local offices in 43 countries.
The acquisition, which is subject to regulatory approvals, is expected to be completed by the end of October 2006. Following completion, the business will operate under the Lockton name and remain based in London.
The purchase includes Alexander Forbes' insurance brokerage operations in corporate risk, professional indemnity, property, construction, aviation, marine, energy and specialist business such as political risk and contingency.
Lockton Companies had 2005-06 revenues of $409 million (£216 million) and 2,100 people.
The Alexander Forbes businesses to be acquired had 2005-06 revenues of $202 million (£107 million) with a staff of 1,600 people.
"We know this company very well. For the past decade, our teams have worked side-by-side to provide international insurance and risk management solutions to most of Lockton's U.S.-based clients," said David M. Lockton, Chairman of Lockton, Inc. "Lockton's unique private ownership has provided a superior level of service to clients for the past 40 years. This is the perfect opportunity to expand globally."
John L. Lumelleau, Lockton Chief Executive Officer, added, "Alexander Forbes has an impressive global platform and expertise. This provides Lockton with the ability to serve our clients with an even broader array of global risk management expertise with local insight and services."
Mike Hammond, Deputy Chairman of Alexander Forbes International Risk Services, will become Chairman of Lockton International Holdings. "This is a landmark deal," Hammond said. "We are building a great company that will attract and retain the best people in the industry, and create a powerful independent alternative for buyers when choosing their worldwide partner."
Stewart McCulloch, Chief Executive Officer of Alexander Forbes International Risk Services, will become the CEO of Lockton International Holdings. "Lockton has been a valued business partner of ours for more than a decade, so we go into this new enterprise with the greatest of confidence. The operations of our two businesses complement each other, both in terms of geographical presence and the skills that we all bring to the table."
John Percy-Davis, current Executive Chairman of Alexander Forbes International Risk Solutions, will work closely with Lockton's international team and continue as Chairman of EOS RISQ, the European broker partnership.
Lockton will have majority ownership in Lockton International Holdings Limited, the new entity, with minority investment from management and Trident III, L.P., an investment fund managed by Stone Point Capital, LLC of Greenwich, CT.
"We value the Stone Point participation in this acquisition, and look forward to working with them in growing our international business," said David Lockton. "We nonetheless are fiercely committed to our independence because it allows us to make long-term investments in our people and our company, so we can offer superior service to our clients." Lockton will remain a privately held firm owned by the Lockton family and key executives.
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