With Arthur J. Gallagher’s (AJG) acquisition of Willis Re’s treaty reinsurance operations now complete, resulting in a much larger Gallagher Re, senior executives told Reinsurance News that it feels like day one at a billion dollar startup.
In the past seven years, Gallagher Re has established itself as the fifth largest reinsurance broker in the world. Add to that the long-established global footprint and success of the Willis Re business, and it’s a really exciting combination.
This is according to AJG Chairman, President and CEO Pat Gallagher and James Kent, the new Global Chief Executive Officer (CEO) of Gallagher Re, who spoke with Reinsurance News about the successful acquisition and what this means going forwards.
“The way we’re looking at this, is really a billion dollar startup,” said Kent. “It feels that here we are at day one, at a billion dollar startup with tremendous market goodwill, tremendous loyalty by both clients and our colleagues, and the opportunity to build on all of those good things.”
Both Kent and Gallagher foresee numerous opportunities for the now much bigger Gallagher Re, including the mix of talent between the two organisations and also the way the businesses complement each other.
“Gallagher Re has strengths in many business lines, and whether that’s mortgage, cyber, UK motor, PA or specialty lines, they are a really good fit with the existing Willis Re footprint. Even in areas where there appears to be a concentration such as Latin America and Marine, the two businesses match up really well in having very different client profiles. Add the product lines knowledge to the expertise, strength and depth that Willis Re brings around the world and it’s a really exciting combination,” said Kent.
Expanding on Kent’s comments around talent, Gallagher commended the tremendous effort of the executive and leadership team of Willis Re through the entire organisation for being able to keep the team together.
“Now they’ve landed, the waiting period is over. There’s no more talk of if, and who’s going to come and who’s not. 2,200 new colleagues and virtually everybody said yes, let’s give this a go,” said Gallagher.
“We’ve got a group that has come together on both sides. As James said, the best startup I’ve ever seen in my 50 years in this business was Gallagher Re. You combine that leadership team and the team from Willis Re, and it is a one plus one equals five. I couldn’t be more excited,” he continued.
Of course, with any merger there’s going to be integration and certain challenges that come with that.
As our readers will be aware, AJG has completed an enormous amount of acquisitions since its inception in 1927, and while some will have been more challenging than others, Gallagher explained that there’s minimal conflict with the Willis Re deal.
“So, what’s good about this is that the integration conversations aren’t about who wins and who loses, when sometimes that’s the way integrations have to go. This is not like that at all. There’s no winners and losers here. It’s all about how do we take this thing forward as quickly as we can,” said Gallagher.
Kent explained that while there’s been a ton of integration work on the operational side to bring these two entities together, the reinsurance business integration starts now.
“We will look to accelerate that through Q1, with a structure announcement and management team announcement by the end of the quarter,” said Kent.
“As with any business, integration sounds very easy to say but you’ve got to put it into practice, and human beings are complex. But I genuinely see the two businesses as very complementary,” he added. “I see the management teams, certainly in the interactions that I’ve had, as incredibly mature and focused on two things: our clients and our colleagues. And as long as that remains, we are going to get there in terms of a really, really strong integration process and bringing out what’s best again for those two constituents, our clients and our colleagues.”
At a cost of $3.25 billion, the acquisition is no small investment for AJG, but as Gallagher explained, this is about more than just reinsurance and it’s expected that synergistic opportunities for Gallagher Re will emerge with other AJG units.
“People say why the big investment? Well, it starts with exactly what James was talking about, the clients. Reinsurance is at the heart of every retail client’s need. They don’t know it, but they’re not going to trade with the major carriers around the world without good reinsurance capabilities. It’s really at the heart of everything that happens in this industry.
“And to be part of that in a bigger way now, the opportunity for us to know downstream what are the concerns of the reinsurance model? What’s happening with accumulations? Where are people taking larger retentions, and why? Where’s the profitability? That is all going to play a huge part,” said Gallagher.
“The data and analytics that we’ll receive now for our clients, and how we’ll use that data and analytics, it just makes us stronger across the spectrum. It’s not just reinsurance. I’m talking to retailers every day about why they should be excited about this deal, the position that it puts us in and why that benefits the retail middle market client,” he continued.
Now the combination is finalised, Kent stressed that from day one, the focus has to be on taking the best of the culture of both organizations and bringing that and making it an even better culture on a combined basis.
Looking further ahead, he highlighted four themes that will underpin the integration process that Gallagher Re goes through.
“One is about combining the best of the two businesses. The second is real and proper connectivity between our product and practice groups in our regions, so that you’re delivering that knowledge and expertise right across the globe, irrespective of where it sits.
“The third is bringing Gallagher Re to our global clients. And the fourth is about talent; it’s about providing a platform where colleagues want to work, where they want to stay, where they see their long-term career aspirations. And that includes attracting talent to the organization as well. So, if we get those four things right, I feel that will underpin a business for the foreseeable future that will be very, very effective,” said Kent.
For group CEO Gallagher, this is another seminal moment for AJG.
“I think when we look back on this in years to come we’ll say that it was one of the greatest things that the organization ever did, both for our clients and for our people. And if that’s right, then the investors are going to do extremely well. And I’m very proud of that.
“I’m proud of the fact that this team basically chose to become part of Gallagher. Because that is what they had, they had a lot of choices down to the individual level, and for all of those new colleagues to say, yes, let’s give it a go as Gallagher Re, I couldn’t be prouder,” said Gallagher.
