The acquisition transaction is expected to close before the end of this year.
The Ardonagh Group Limited has announced that it has acquired the insurance brokerage business from BGC Partners, Inc for $500 million of cash consideration.
BGC is a leading global financial technology and brokerage business.
“The agreement to sell our Insurance Brokerage business for $500 million reflects the significant value we have created since entering this market in 2017. Like our previous sales of eSpeed and Trayport, as well as our IPO and tax-free spin-off of Newmark, this sale further demonstrates our commitment to driving shareholder value,” said BGC CEO and chair Howard W. Lutnick. “While we have built an exceptional Insurance Brokerage business, this sale will focus our resources on Fenics. We expect to use the proceeds to accelerate Fenics growth and to repurchase shares and/or units.”
Lutnick went on to praise Ardonagh, stating that the combination of that platform into BGC’s would boost the independent specialty broker’s strength and capability.
The purchase agreement would have Ardonagh acquiring the entire BGC insurance brokerage business.
This will involve all entities that comprise that business. In return, BGC will receive $500 million in cash, which will be subject to a limited range of potential adjustments as the transaction is completed. That is expected to happen in the second half of 2021, before the close of the year. The transaction closure is subject to typical closing conditions, which include receiving the necessary regulatory approvals.
BGC will include the one-time gain from this transaction in its consolidated U.S. Generally Accepted Accounting Principles (GAAP) results. That said, the transaction’s one time gain will not be included in the Adjusted Earnings for the company.
BGC brought in about $191 million in revenue from its insurance brokerage business during the 12-month period that concluded at the end of March. The company plans to use the sale’s proceeds for investing in its Fenics business, which saw a 40 percent year over year growth during the first quarter of 2021, as well as to repurchase some of its own shares and/or units and for general corporate purposes.