Alexander & Alexander Services Inc. said yesterday that it will pay up to $54 million for the U.S. arm of the world's eighth-biggest insurance brokerage firm, in a deal the New York brokerage company said marks its return to growth after a severe restructuring that eliminated 400 jobs.
Alexander & Alexander is based in Manhattan, but the largest part of its administrative staff is in Owings Mills, where the company has almost 500 employees. It has more than 250 workers at a sales office in Baltimore as well.
The firm said it will buy Jardine Insurance Brokers Inc., the U.S. retail arm of JIB Group PLC of London. Jardine, which is based in San Francisco, employs 500 people in 11 offices around the country.
Alexander & Alexander is buying Jardine's commercial insurance brokerage business but not its operation that sells insurance to consumers, Alexander & Alexander spokesman Gary Sullivan said.
"It fills a regional niche for us," Mr. Sullivan said. "We've been stronger in the East, and the offices we'll be buying are weighted toward the western and central states."
Five of Jardine's offices are in California, and the others are in Kansas City/Topeka, Phoenix, Houston, Detroit, Chicago and New York.
Mr. Sullivan said Alexander & Alexander Chairman Frank G. Zarb had promised to "go gangbusters on growth" after completing the cuts early this year. "That's where we are now," Mr. Sullivan said.
Half of the $54 million price will be paid on closing, which is expected next month. The rest is due in installments in 1996, with the price subject to adjustment based on profits.
The merger, however, matches A&A; with a company whose profits have been shrinking, much as Alexander & Alexander's share of the commercial insurance business has shrunk in recent years.
Alexander & Alexander slipped to fourth place among the world's insurance brokers last year with $1.3 billion in revenue, down from second place in 1993, according to Business Insurance, a Chicago trade publication.
Jardine's British parent company said its earnings were off 12.5 percent in the first half of the year, with business down in both the United States and the United Kingdom. The operations sold to Alexander & Alexander made 3 million pounds sterling in 1994, about $4.7 million, on $60 million of revenue.