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Arthur J. Gallagher & - Insurance Brokers -
Category Directory
Two
Pierce Place
Itasca, Illinois 60143-3141
(630)
773-3800
www.ajg.com
Sales
$1.3
billion
Business Description
Arthur J. Gallagher & Co. and its subsidiaries (collectively referred to as
“Gallagher” unless the context otherwise requires) are engaged in providing
insurance brokerage, risk management and related services to clients in the
United States and abroad. Gallagher’s principal activity is the negotiation
and placement of insurance for its clients. Gallagher also specializes in
furnishing risk management services. Risk management involves assisting
clients in analyzing risks and determining whether proper protection is best
obtained through the purchase of insurance or through retention of all or a
portion of those risks and the adoption of corporate risk management
policies and cost-effective loss control and prevention programs. Risk
management services also include claims management, loss control consulting
and property appraisals. Gallagher believes that its ability to deliver
comprehensively structured risk management and brokerage services is one of
its major strengths. In addition, Gallagher has a financial services
operation that manages its investment portfolio.
Gallagher operates through a network of more than 250 sales and service
offices located throughout the United States and eight countries abroad and
through a network of correspondent brokers and consultants in more than 100
countries around the world. Some of these offices are fully staffed with
sales, marketing, claims and other service personnel; others function as
servicing offices for the brokerage and risk management service operations
of Gallagher. Gallagher’s international operations include a Lloyd’s of
London broker and affiliated companies in England and other facilities in
Australia, Bahrain, Bermuda, Canada, Malaysia, Scotland and Singapore.
Brokerage
The Brokerage segment comprises three operating divisions: the Brokerage
Services-Retail Division (BSD), Specialty Marketing and International (SMI)
and Gallagher Benefit Services (GBS).
BSD places insurance for and services commercial, industrial, institutional,
governmental, religious and personal accounts throughout the United States
and abroad. SMI places insurance for and services commercial, industrial,
institutional, governmental, religious and personal accounts throughout the
United States and abroad. BSD and SMI act as agents in soliciting,
negotiating and effecting contracts of insurance through insurance companies
worldwide, as brokers in procuring contracts of insurance on behalf of
insureds, and as administrators in setting up and managing self-insured
programs. In addition, SMI places insurance on behalf of other brokers. BSD
and SMI both have the capability to handle insurable risks and related
coverages for all forms of P/C products. SMI also places surplus lines
coverages, which are coverages for various specialized risks not available
from insurance companies licensed by the states in which the risks are
located. In addition, SMI’s reinsurance intermediary operations place
reinsurance coverages for its insurance company clients.
GBS specializes in the management of employee benefit programs through fully
insured and self-insured programs. GBS provides services in connection with
the design, financing, implementation, administration and communication of
compensation and employee benefit programs (including pension and
profit-sharing plans, group life, health, accident and disability insurance
programs and income tax deferral plans), and provides other professional
services in connection therewith.
The primary source of Gallagher’s compensation for its Brokerage segment is
commissions paid by insurance companies which are usually based upon a
percentage of the premium paid by insureds. Commission rates are dependent
on a number of factors including the type of insurance, the particular
insurance company and the capacity in which Gallagher acts. In some cases,
Gallagher is compensated for brokerage or advisory services directly by fees
from clients. Gallagher may also receive contingent commissions which are
based on the estimated profit the underwriting insurance company earns
and/or the overall volume of business placed by Gallagher in a given period
of time. Occasionally, Gallagher shares commissions with other brokers who
have participated with Gallagher in placing insurance or servicing insureds.
GBS receives a fee for acting in the capacity of advisor and administrator
with respect to employee benefit programs and receives commissions in
connection with the placement of insurance under such programs.
Risk Management
The Risk Management segment comprises two wholly-owned subsidiaries:
Gallagher Bassett Services (GB) and Gallagher Benefit Administrators (GBA).
Approximately 90% of this segment’s total revenues are generated by GB.
GB provides a full range of risk management services including claims
management, risk control consulting services, information management, and
property appraisals on a totally integrated or select, stand-alone basis. GB
provides these services for Gallagher’s clients through a network of service
offices located throughout the United States, Canada, England, Scotland and
Australia.
GB primarily markets its risk management services directly to clients on an
unbundled basis independent of Gallagher. GB also markets these services to
BSD and SMI clients who are interested in P/C risk management related
services.
In connection with its risk management services, GB provides
“self-insurance” programs for large institutions, risk sharing pools and
associations, and large commercial and industrial customers. Self-insurance,
as administered by GB, is a program in which the client assumes a manageable
portion of its insurance risks, usually (although not always) placing the
less predictable and larger loss exposures with an insurance carrier that
specializes in these less predictable exposures.
GBA is a third-party administrator that serves the self-funded employee
health benefit marketplace by integrating effective managed care and quality
assurance programs with claims administration services. The employee health
benefit services provided by GBA are, in many instances, directly supported
by GBS.
GB’s and GBA’s revenues for risk management services are substantially in
the form of fees. These fees are typically negotiated in advance on an
annual basis based upon the estimated volume of the services to be
performed.
Financial Services
Financial Services is primarily responsible for Gallagher’s investment
portfolio which includes marketable securities, tax advantaged investments,
real estate partnerships, an investment in Allied World Assurance Holdings,
Ltd., an alternative investment fund manager, notes receivable from
investees and an investment in an airplane leasing company that leases two
cargo airplanes to the French Postal Service. Financial Services manages the
invested assets of Gallagher in order to maximize the long-term after-tax
return to Gallagher. During the first quarter of 2003, Gallagher decided to
withdraw virtually all continued support for its venture capital
investments, except to the limited extent needed to realize value from the
remaining assets. Without Gallagher’s support, it was doubtful that these
operations would be able to execute their business plans.
Insurance Brokers in the Directory
Aon
Arthur J. Gallagher
Marsh & McLennan
Willis Group
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