Revealed: $98m bumper payday for former First Ireland directors
The former owners of First Ireland earned up to $24.5m from the Dublin brokerage’s $97.8m (€90.5m) sale to US insurance giant Arthur J Gallagher & Co.
Details of the acquisition were included in Gallagher’s annual report for 2023. The total recorded price included $86.4m paid in cash, $5.3m deposited in escrow, and a $6.1m recorded earnout payable.
Former shareholders of First Ireland included Cathal Duffy, Linda Gallagher, Tony Gill, Conor Lyons, John Roe and Sarah Sheridan.
By taking their shareholding from First Ireland’s annual return, Gill and Roe earned a package worth up to $24.5m, Gallagher earned up to $16.43m, Sheridan and Lyons up to $12.2m and Duffy around $8m.
A spokesman for Gallagher brokers declined to comment, saying it has a policy of not commenting on individuals.
The acquisition details provide a rare insight into the high valuations achieved by Ireland’s brokers, who have been targeted by large international competitors and private equity-backed vehicles eager to consolidate the sector.
Recent broker acquisition announcements typically failed to include the deal’s value. Still, commentators have stated that the high level of competition for deals has contributed to owners achieving eye-watering valuations ahead of sales.
Gallagher, one of the world’s largest insurance brokerages with a valuation of over $53.8bn, acquired First Ireland Risk Management in early January 2023, but no financial details were disclosed. The deal almost doubled the size of Gallagher’s Irish business overnight, with gross written premiums in Ireland going from €70m pre-deal to €140m.
The annual report provided detailed breakdowns of Gallagher’s top ten acquisitions for the year, including the $886m deal to buy Louisiana-based Cadence Insurance and the $620.8m purchase of BCHR. It showed Gallagher acquired 51 brokers in total, with the recorded purchase price for the deals standing at $3.74bn.
The report did not include a detailed breakdown of Gallagher’s other Irish acquisitions in 2023, which included Keaney Insurance Brokers.
Ronan Foley, chief executive of Gallagher Ireland, said the business was looking to make more acquisitions in the Irish market.
Gallagher entered the Irish market by acquiring private equity-backed Innovu in 2022.
Innovu had already snapped up several brokers, including Sheridan Insurances, Wexford Insurances, Goggin Insurance Brokers, Cullen Insurances and PE Kelly Insurances.
Gallagher isn’t alone in seeking brokers to buy. Over 1,200 firms are represented by the industry group Brokers Ireland, with many attracting interest from international groups, including Howden, Ardonagh, NFP, and PIB.
Deal activity for brokerages has continued. In January, Campion Insurance, PIB Group’s lead division in Ireland, acquired Blackrock-based broker FitzGerald Flynn Insurances. Last month, Howden acquired the Drogheda-based Intersure Group.
A&L Goodbody said much of the activity had been driven by private equity-backed buyers, who see insurance brokers as a good short- to medium-term investment to which they can add value before selling on. Targets are often being viewed as attractive for their asset-light businesses and consistent cashflow models, well suited to ‘roll-up’ acquisition strategies.