Arthur J Gallagher buys Yorkshire’s Oval in £210m deal

Phillip Hodson, non-executive chairman of Oval Ltd
Phillip Hodson, non-executive chairman of Oval Ltd
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ONE of the world’s largest insurance brokers has bought the Yorkshire group founded and built up by Phillip Hodson, the former president of the Marylebone Cricket Club.

Arthur J Gallagher paid £210m for the goodwill and an undisclosed sum for the net assets of Oval Ltd, the Wakefield-based company.

“It is a cash up front deal with no deferred consideration,” said Mr Hodson, whose family-owned firm RP Hodson formed the basis for Oval.

The chairman added that the combined UK group will place more than £2bn of corporate premiums into the corporate retail market place, making it the market leader.

He said this will provide clients with great strength when broking risks and settling claims.

The deal also strengthens Gallagher’s position as a leading consolidator of independent brokers in the UK. The US firm acquired Giles, a UK consolidator, in September for £233m. The Oval deal leaves one other major consolidator in the UK, Towergate.

Mr Hodson said scale is vital to any business. He added: “Scale gives power to your clients. This will be the biggest UK retail business.”

He questioned the ability of small high street brokers to compete against large players like Gallagher, Marsh and Aon.

Oval has 24 offices and employs 1,200 people. It had gross written premiums of £390m last year, a rise of 1.8 per cent on the previous year. The group reported a 12.6 per cent increase in earnings before interest, tax, depreciation and amortisation to £16.9m.

Mr Hodson is the largest individual shareholder. Caledonia Investments, the listed investment trust, holds 35 per cent of the shares.

Mr Hodson said that the deal “not only represents a good return for shareholders but also is good for clients and staff, as it is yet another evolutionary step along the path from provincial broker, RP Hodson, to national broker, Oval, to what is now one of the largest international brokers in the world”.

Gallagher is headquartered in Illinois and offers services in more than 140 countries across the world through a network of correspondent brokers and consultants. It was founded in Chicago in 1927 and is listed on the New York Stock Exchange.

He said: “AJ Gallagher is still a family run with led by Patrick and Tom Gallagher in the USA and they share the same values as Oval.”

Phillip’s father Peter Hodson founded the business in 1965. He took over in 1977 when the turnover was £25,000. Today the turnover is nearly £100m, said Mr Hodson.

RP Hodson reversed into Oval in 2003 and became a consolidator in the broking market, acquiring 36 businesses between 2003 and 2011 with the support of Barclays in Leeds and Lloyds in London.

Mr Hodson said the two banks have been crucial to the development of the company and provided consistent support.

He added that Caledonia has been “incredibly loyal and supportive”, particularly during the onset of the economic downturn in 2008.

Mr Hodson, who attended Wakefield Grammar School and read history at Cambridge University, played cricket for Yorkshire County Cricket Club and Western Transvaal and was president of MCC in 2011-12.

The 62-year-old told The Yorkshire Post that he now plans to spend time working with charities. He supports a charity that builds schools and cricket pitches in Afghanisation.

Mr Hodson also owns farms in the South of France and hopes to build a small boutique hotel in the region.