Lockton to Acquire Forbes International Creating Biggest Private Broker

August 21, 2006

Lockton, Inc. and Alexander Forbes Ltd., the world’s ninth largest insurance broker, have reached a definitive agreement whereby Lockton will acquire Alexander Forbes International Risk Services, the international brokerage operation of Alexander Forbes Limited (AFIRS). “The $170 million (£90.2 million) transaction will make Lockton the largest independent, privately owned global insurance broker,” said the bulletin. “The combined business will have more than $600 million in revenues.”

When combined with AFIRS’ position in the European broker partnership, EOS RISQ, the fusion of the two organizations will create an organization with local representation in 43 countries. It is expected to be completed by the end of October 2006 and is subject to regulatory approval.

Lockton said: “The purchase includes Alexander Forbes’ insurance brokerage operations in corporate risk, professional indemnity, property, construction, aviation, marine, energy and specialist business such as political risk and contingency.” The broker is the 11th largest broker in the U.S., employing some 2100 risk experts and serving more than 15,000 clients.

The announcement noted: “The new company – Lockton International Holdings Limited – will operate under the name of Lockton and remain based in London. Lockton International Holdings Limited will be a separate entity in the Lockton Group.

Mike Hammond, Deputy Chairman of AFIRS will become Executive Chairman of Lockton International Holdings. “This is a landmark deal,” he stated. “We are building a great company that will attract and retain the best people in the industry and create a powerful independent alternative for buyers when choosing their worldwide insurance partner.”

Stewart McCulloch, CEO of AFIRS will become chief executive of Lockton International Holdings. “Lockton has been a valued business partner of ours for more than a decade so we go into this new enterprise with the greatest of confidence,” he indicated. “The operations of our two businesses complement each other, both in terms of geographical presence and the skills that we all bring to the table.”

“We know this company very well. For the past decade, our teams have worked side-by-side to provide international insurance and risk management solutions to most of Lockton’s U.S.-based clients,” observed Lockton’s Chairman David M. Lockton. He also noted that his Company’s “unique private ownership has provided superior levels of service to clients for the past 40 years. This is the perfect opportunity to expand globally.”

John Percy-Davis, currently executive chairman of AFIRS, will continue to work closely with Hammond, McCulloch and the Executive team. He will remain Chairman of EOS RISQ.

Lockton’s CEO John Lumelleau added: “Alexander Forbes has an impressive global platform and expertise. This provides Lockton with the ability to serve our clients with an even broader array of global risk management expertise with local insight and services.” Lockton will have majority ownership in Lockton International Holdings with minority investment from management and Trident III, L.P., an investment fund managed by Stone Point Capital, LLC of Greenwich, CT.

David Lockton stated: “We value the Stone Point participation in this acquisition, and look forward to working with them in growing our international business. We nonetheless are fiercely committed to our independence because it allows us to make long-term investments in our people and our company, so we can offer superior service to our clients.” Lockton will remain a privately held firm owned by the Lockton family and key executives.

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