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JLT to sell U.S. retail brokerage business

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NEWPORT BEACH, Calif.—U.K. broker Jardine Lloyd Thompson Group P.L.C. has agreed to sell its U.S. property/casualty and employee benefits retail brokerage business to Alliant Insurance Services Inc. in a $100 million deal announced last week.

The acquisition, which is expected to close next month, will expand Alliant's operations in the United States, adding six offices, approximately 240 employees and roughly $60 million in revenue, the broker said.

London-based JLT said the sale stems from an operational review, launched earlier this year, designed to identify the broker's strongest business areas.

Houston-based JLT USA specializes in employee benefits, energy and marine, and health care and has offices in Waterbury, Conn.; Atlanta; Chicago; New York; and Dallas.

"The purchase of JLT USA is an exciting opportunity for our company," Tom Corbett, Alliant's chairman and chief executive officer, said in a statement. "The JLT U.S. retail operations are quite specialized and truly complement our existing business."

Alliant, which has changed its name to Alliant Insurance Services from Alliant Resources Group Inc., is the 13th largest brokerage of U.S. business, based on $205.9 million in 2005 brokerage revenues from U.S.-based clients. The broker recently moved its headquarters to Newport Beach, Calif., from Stamford, Conn.

JLT, which was the 14th largest broker of U.S. business, based on $194.0 million in U.S. brokerage revenue, will continue to place U.S. wholesale and reinsurance business and to operate U.S.-based specialty aviation and wind power insurance businesses, a JLT spokesman said.

"The sale of the retail part of our U.S.-based operations is an important step forward in implementing the results of the operational review that we initiated earlier this year," Dominic Burke, JLT's chief executive, said in a statement. "The disposal is consistent with JLT's strategy of concentrating on areas of proven business strength."

JLT said in March it would undergo a review of its business as it faced tougher operating conditions in the wake of investigations into brokerage compensation practices initiated by New York Attorney General Eliot Spitzer in 2004 (BI, March 13).

While JLT was not forced to make a settlement offer to clients like some of its larger U.S. rivals, it voluntarily ceased collecting contingents on large, commercial business in an effort to become more transparent. JLT, though, still collects contingent commissions on some business--mainly U.K. regional business--in which it competes with regional brokers that are still using such commission structures.

In announcing the review, Mr. Burke said the process would "evaluate prospective developments in the broking industry and enable us to clarify and refine our strategy to better equip the group for the challenges the business faces today."

In July, JLT said it was in preliminary discussions to acquire rival London-based brokerage Heath Lambert Group, but Heath pulled out of those talks, saying only that a merger would not have been in the best interests of its staff or clients (BI, July 17).

In a statement on the JLT/Alliant deal, analysts from Keefe, Bruyette & Woods Ltd. in London noted that "the sale removed conflicts between the retail operations and wholesale business of (JLT subsidiary) Lloyd & Partners" and is consistent with JLT's strategy of focusing on "areas of proven business and management strength."

Alliant was founded in 2000 by John Addeo, a veteran insurance brokerage builder who previously worked with Bernard H. Mizel in creating Briarcliff Manor, N.Y.-based USI Holdings Corp. Mr. Addeo, who was Alliant's CEO, left the brokerage at the end of 2005 following its acquisition by New York-based private equity firm Lindsay Goldberg & Bessemer and other management and employees. He has since teamed up with former Marsh Inc. executive Christopher M. Treanor to form wholesaler Mercator Risk Services Inc. in New York.