Jardine Lloyd Thompson Group plc (JLT) said it has sold its U,S. based property and casualty insurance and employee benefits businesses to California-based Alliant Insurance Services, Inc.
“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. The disposal is consistent with JLT’s strategy of concentrating on areas of proven business strength,” explained Dominic Burke, CEO of London-based JLT.
Tom Corbett, CEO of Alliant Insurance, said JLT’s business is a good fit for his firm. “The JLT U.S. retail operations are quite specialixed and truly complement our existing business. This acquisition increases not only our geographic span but more importantly, enhances our position as the premier specialty broker in the U.S,” Corbett said.
The consideration is $100 million (£53.2m) including $5 million (£2.7m) of deferred consideration payable by instalments at the end of 2008 and 2009, subject to the profitability of the businesses being sold. The net consideration on completion after transaction costs, including retention bonuses, is approximately $85 million (£45.2m),
payable in cash.
JLT said the proceeds will be used to further enhance the group’s financial position including debt reduction. The loss on sale before tax will be approximately £16.5m, subject to completion adjustments. This loss includes the write off of goodwill and transaction costs and will be treated as an exceptional item.
Alliant Insurance Servcies, based in Newport Beach, California, has a network of companies offering property and casualty and risk management services, employee benefits, life insurance, retirement and savings programs. These include Driver Specialty Group, Alliant Specialty Insurance Services, Alliant Risk Services Group, Franey Muha Commercial Group and Kelter Commercial Group.
JLT said it will continue to operate specialist U.S.-based aviation and wind power insurance businesses and reinsurance operations and will build on its position as a provider of access to the London and Bermudian insurance markets for U.S. brokers and their clients.
The sale comprises gross assets of $102.4 million (£54.5m). The assets are predominantly goodwill with attributable turnover of $54.2 million (£29.8m) and profit before tax of $6.8 million (£3.7m) in 2005. The annualized net impact on earnings per share excluding the loss on sale is anticipated to be broadly neutral.
It is expected that the sale, which is subject to a number of conditions including regulatory approval, will be completed before 31st October 2006.
Houlihan Lokey Howard & Zukin, an international investment bank, served as exclusive financial advisor to JLT in this transaction.
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