Gallagher expects AssuredPartners deal to close in fall despite queries

Executives at Arthur J. Gallagher & Co. said Thursday they were surprised by antitrust regulators’ request for more information on its planned acquisition of rival AssuredPartners Inc. but continue to expect to close the deal in the mid-second half of this year.

Overall, the brokerage is seeing a strong first quarter as the U.S. economy remains strong, though tariffs introduced or proposed by the Trump administration may eventually increase costs for insurers, they said during the brokerage’s quarterly call with analysts and investors.

Earlier this month, Gallagher disclosed it had received a request for additional information as part of its Hart-Scott-Rodino filing related to the $13.45 billion AssuredPartners deal. The HSR filings are required by antitrust regulators for sizeable deals. As a result of the request, Gallagher pushed back its estimated close for the deal to the second half of this year from the first quarter.

The deal would be one of the largest acquisitions in the brokerage sector, which likely stimulated additional interest from regulators, said J. Patrick Gallagher Jr., chairman, president and CEO.

“They haven’t given us any indication that (they are) concerned about this level or that level of ownership of premium income or revenue, so it’s just a matter of trying to fill out for them the requests,” he said.

It will “take a while” to gather the information requested by the Department of Justice, said Douglas Howell, Gallagher’s chief financial officer. “We’re hoping we can get this done in the fall sometime,” he said.

Gallagher has already received HSR approval for its $1.2 billion acquisition of Woodruff Sawyer, announced earlier this month, Mr. Howell said.

Meanwhile, Gallagher continues to see strong new business production in the current quarter and expects organic growth of 8% to 9% in its brokerage business for the period, he said.

The brokerage has seen some moderation of property premiums in the quarter but continued steady increases in liability lines, Mr. Howell said.

Brokers continue to operate in a favorable economic environment, and Gallagher has not seen negative effects on businesses from increased tariffs, he said.

“On the other hand, we were having a hard time building a case where tariffs don’t cause some inflation that in turn puts some upward pressure on loss costs,” Mr. Howell.