Insurance broker Arthur J. Gallagher & Co. will move its headquarters to Rolling Meadows, Ill., where it plans to add 500 jobs over the next five years.

Gallagher, the fourth-largest commercial insurance broker in the country, plans to move to Chicago's northwest suburb from west suburban Itasca, Ill., after conducting a headquarters search that included Indianapolis and Kansas City, Mo., a spokesman for the Illinois Department of Commerce and Economic Opportunity confirmed Thursday.

The firm will get an estimated $20.7 million in state incentives over 10 years, mostly in Economic Development for a Growing Economy (EDGE) tax credits, according to the DCEO.

State incentives are contingent on Gallagher retaining 825 jobs, adding 150 workers within the next two years and hiring another 350 within the next five years, the spokesman said.

CEO J. Patrick Gallagher Jr., grandson of the company's founder, did not respond to requests for comment.

Gallagher on Feb. 19 paid about $13.4 million for a 10-story, 288,144-square-foot office tower at 2850 W. Golf Road in the Meadows Corporate Center in Rolling Meadows, Cook County, Ill., records show.

The firm had its headquarters in the office complex before moving to Itasca in 1991. It leases about 306,000 square feet at 2 Pierce Place in Itasca, where its lease expires in 2018. It is unclear whether it will remain in any of that space after the headquarters move.

Gallagher plans to invest about $60 million on redeveloping the Rolling Meadows building, the DCEO spokesman said. The tower was completed in 1976.

%%BREAK%%

Had it moved out of state, Gallagher indicated to Illinois that it would have kept a reduced staff in Itasca, the spokesman said. He was unsure when Gallagher plans to move to Rolling Meadows.

Crain's Chicago Business first reported in January that Gallagher had an agreement to buy the Rolling Meadows building, but it was unknown at the time whether the deal would involve a headquarters move.

As part of the Meadows acquisition, Chicago developer John Buck Co. bought the neighboring 10-story tower, at 2550 W. Golf Road, for about $11.6 million. In the unusual deal, Buck took out a $7.5 million loan from Gallagher that matures in two years, according to county records.

Donald Miller, president and CEO of Johns Creek, Ga.-based Piedmont Office Realty Trust, which owns the Itasca tower, could not immediately be reached for comment.

Ryan Ori writes for Crain's Chicago Business, a sister publication of Business Insurance.