April 27, 2005 by Canadian Underwriter
Broker Arthur J. Gallagher says it has set aside US$35 million to resolve current state investigations into insurance practices.
The company made the announcement as part of its first-quarter 2005 results release. In that release, the company states: “The insurance industry in general, and Gallagher individually, continue to be the subjects of a substantial number of regulatory and legal actions by many state attorneys general and private litigants investigating contingent commissions and various other historical business practices. Over the last several months, three other major insurance brokers have reached settlement with one or more attorneys general,” the statement adds, referring to settlements by Marsh, Aon and Willis with authorities.
Gallagher says the US$35 million pretax charge to first-quarter earnings is based on “the costs of similar industry settlements thus far, plus an accrual for legal costs”. The charge is equal to US$21 million after tax, or US$0.23 per diluted share.