Mergers & Acquisitions and Employee Benefits and Insurance Brokers and Deals and Health Care & Insurance

A.J. Gallagher & Co. strikes again, hires two more benefits brokers

June 29, 2009

The Carmel office of A.J. Gallagher & Co. kept the local consolidation of benefits brokers rolling with two more deals this month.

Noblesville-based The Benefits Group and Louisville-based Creative Benefits Solutions came to terms with Gallagher on June 1, said Dane Hudson, the Indiana president for Illinois-based Gallagher. Gallagher is the fourth-largest benefits firm in the nation.

Offering the resources of a large firm has proved attractive to many benefits brokers the past two years. That's because employers no longer look to brokers merely to find a cheaper plan, but also to help their employees improve their health and use health care more economically. Employers also want Web tools to make health plan enrollment and wellness efforts easier.

Now the uncertainties of health care reform are providing one more reason for brokers to look for merger partners.

"Health care, the landscape is changing, no one knows what it's going to look like in five to 10 years," said Rick Huff, who founded The Benefits Group in 1997. "For my clients, it was imperative that I partner with a firm that had the ability [to adapt]."

In the past two years, 12 Indianapolis-area benefits brokerages have been swallowed up in acquisitions or merged into another firm.

The two firms acquired by Gallagher will bring with them 70 employer clients, running to 300 the total number of clients handled by the company's Carmel office.

Hudson declined to disclose the purchase price for either firm.

He said the two firms will grow office revenue to $5.7 million by year-end, up from $4.1 million last year.

Instead of looking primarily at health benefits brokers, Hudson is now eyeing human resources consulting firms, brokers of retirement services, and firms offering voluntary benefits—programs offered through employers but paid for entirely by workers.

"I still have the opportunity to go out and pursue health acquisitions," Hudson said. But, he added, "a lot of people are waiting to see what's announced in August by the Obama administration regarding health care reform."

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