Acquisition raises the profile of KC-based insurance brokerage.

“When I joined the company, we had 10 people. We didn’t even expect to be the largest broker in Kansas City back then.”

David Lockton

A Kansas City insurance agency that started in second-floor walkup office is about to become the 10th-largest insurance brokerage in the world.

Lockton Inc., the parent organization of Lockton Cos. Inc. and its affiliates, said Monday it is buying the international insurance brokerage arm of Alexander Forbes Ltd., Africa’s largest independent pension fund administrator, for $170 million.

The transaction is expected to be completed in October, if regulators in South Africa, the United Kingdom and the U.S. approve the proposal as expected.

The acquisition of Alexander Forbes International Risk Services in London is Lockton’s first international expansion and represents a once-in-a-lifetime opportunity for the Kansas City based insurance brokerage, David Lockton, the company’s chairman, said in telephone interview from London.

Insurance brokers are agents who represent insurance buyers rather than sellers. Brokerages such as Lockton also design, negotiate and implement business insurance plans for their clients.

The Lockton companies established a business relationship with the Forbes unit a decade ago to help provide international services for clients. More recently, as Forbes’ parent — and ninth-largest world insurance brokerage — began refocusing its business on its African interests, “this became the perfect opportunity to expand globally,” Lockton said.

“More and more of our clients are expanding overseas. It’s becoming a global world,” he said.

The Lockton companies, which have long constituted the United States’ largest independent insurance brokerage, will now become the world’s largest independent such enterprise as well. Its projected revenues will jump about 50 percent, to about $600 million, and its now 2,100-member work force will expand to 3,700 in 43 European, North American, Latin American and Asian offices.

“When I joined the company, we had 10 people,” Lockton said. “We didn’t even expect to be the largest broker in Kansas City back then.”

The Lockton enterprises all trace back to a small family insurance agency that Jack Lofton, David’s brother, joined in 1966 in a second story walkup over Sidney’s Diner, near Broadway and Valentine Road.

Its earliest clients were primarily construction companies, which the Lockton’s credit for inspiring the short communications lines, flexible decision making and investment in client services that David Lofton said is a key element in the company’s nearly 20 percent annual growth rate in its key businesses.

Forbes was founded in 1935 when a Johannesburg merchant, Emile Levy & Co. consolidated a number of South African insurance agencies into a single business. It also expanded into a variety of consulting and brokerage enterprises and, in the late 1990s, acquired the international unit that Lockton is buying now.

Forbes now plans to use the proceeds of that unit’s sale to pay down debt in the United Kingdom and Africa and to improve its remaining businesses, company executives told business news wire services Monday.

Lockton plans to use its new business to expand service to U.S. businesses, such as the Coca-Cola Co. and Coors Brewing Co., with large stakes outside the U.S., David Lockton said.

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By GENE MEYER
The Kansas City Star

To reach Gene Meyer, call (816) 234-4883 or send e-mail to gmeyer@kcstar.com. 

© 2006 Kansas City Star and wire service sources. All Rights Reserved.