Arthur J. Gallagher & Co. announced today that it has agreed to resolve all claims in the Federal Multi-District (MDL) class action pending in the New Jersey Federal District Court against commercial insurers and brokers relating to industry-wide contingent commission matters.
In its written statement, Gallagher admitted no wrongdoing, but said it chose to conclude its involvement, rather than prolong what could be a costly and burdensome lawsuit. Gallagher established a provision for this matter in 2005, and as a result, substantially all of the costs associated with the MDL settlement have been reserved for in its previously reported balance sheet. Gallagher will incur a pretax charge in its fourth quarter 2006 earnings of between $5 million to $10 million to increase its reserve for the costs to be incurred to administratively conclude the MDL settlement and to resolve other regulatory and civil litigation matters.
The settlement, which is subject to court approval, provides for Gallagher to distribute $28 million to current and former clients and others that used a broker to purchase retail insurance from 1994 to 2005. The company will also pay $8.85 million in plaintiff’s attorney fees.
“We are pleased to put this legal matter behind us so we can focus all of our efforts on doing what we do best — providing our clients with high-quality, cost-effective insurance and risk management services,” said J. Patrick Gallagher, Jr., chairman, president and CEO.
Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, is headquartered in Itasca, Illinois, has operations in seven countries and does business in 120 countries around the world through a network of correspondent brokers and consultants.
Source: Arthur J. Gallagher & Co.
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