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HRH buys brokerage Glencairn in bid to boost U.K. operations

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LONDON—Hilb Rogal & Hobbs Co. last week agreed to acquire Glencairn Group Ltd., a London-based independent insurance and reinsurance brokerage group for an undisclosed sum.

Glencairn, founded in 1991, has offices in Australia, Russia and South Africa, as well as in London. It provides products and services primarily in the property, casualty, reinsurance, financial, professional, accident and health, and specialty areas, including political risks and cargo, through both wholesale and retail operations. Glencairn's annualized 2006 revenues are expected to reach about $39 million, making it Glen Allen, Va.-based HRH's largest international acquisition.

"By uniting Glencairn with our existing London operations, HRH will triple its size in the United Kingdom, combining the forces of some of the most talented insurance professionals in London," Martin L. Vaughan III, HRH's chairman and chief executive officer, said in a statement announcing the acquisition. "Our expanded presence in this marketplace will allow HRH increased access to the Lloyd's of London market and other critical international underwriting markets, including Bermuda."

Steve Hearn, Glencairn's current chairman and CEO, will be appointed CEO of HRH's existing London operations—HRH Reinsurance Brokers Ltd. and Lloyd's broker NIB (UK) Ltd.—and continue to lead his current staff. The transaction is scheduled to be completed on Jan. 2, 2007.

HRH ranked 10th on Business Insurance's 2006 ranking of the world's largest insurance brokerages, based on 2005 brokerage revenues of around $658 million.

Two stock analysts who follow HRH said the acquisition made a lot of sense.

"It's a pretty positive deal for them," said Mark Dwelle, an analyst with Ferris, Baker Watts Inc. in Richmond, Va. "It greatly expands their presence in the Lloyd's of London markets. It gives them a cross-sell opportunity, in that if they have U.S. clients that want access to the Lloyd's markets, they can get them there directly rather than having to go through somebody else."

"We were calling for $40 million of acquired revenue next year, and this $39 million acquisition therefore almost meets the goal, and anything else they acquire is accretive earnings," said Nik Fisken, managing director with Stephens Inc. in Little Rock, Ark.

"This definitely boosts the overseas wholesaling operations that they've been trying to add to, so it seems like a great deal all told," Mr. Fisken said.