BY MARK E. RUQUET
Sitting on top of a row of cabinets in an outer office at the Kansas City, Mo.-based Lockton insurance brokerage is an elongated case containing five clocks set to time zones in San Francisco, Denver, Kansas City, New York and London. Those clocks seem to symbolize both the firm’s central hometown foundation, as well as its mission to be a major international player.
In the past year, Lockton has gone from a well-regarded U.S. broker with some international contacts, to a fully-functional multinational brokerage capable of competing with mega-brokers around the world. Comparing its 2005 annual report to the most recent version shows significant expansion—from 18 offices across the United States in 2005, to 44 offices in North America, Europe, Latin America and the Asia-Pacific region today.
Lockton’s biggest move on the global brokerage stage was last year’s acquisition of Alexander Forbes International Risk Services (renamed Lockton International)—the London-based brokerage operations of the financial services firm Alexander Forbes Ltd., headquartered in South Africa. The move boosted revenues from $409 million in 2006 to a projected $667 million this year. Staffing more than doubled from 1,871 associates to 3,825.
The firm also landed a high-profile player—Julian James, formerly director of worldwide markets at Lloyd’s—to serve as executive chairman of international operations at Lockton International. (See page 5 for more details.)
Projections call for continued growth, but not in the conventional sense of many publicly-held brokers. There are two reasons for this. One, Lockton is privately-held. Second, the Forbes purchase aside, the firm prefers to concentrate on organic, not acquisitive growth.
“We are in the profession of practicing insurance brokerage,” said David M. Lockton, chairman of the firm. He says chief executives of publicly-held brokerages worry about increasing margin and shareholder value. At Lockton, he added, the concern is serving clients.
That concern has resulted in double-digit organic growth since 1966, he said, reporting a 14 percent gain through April of this year, despite the softening market.
John L. Lumelleau, president and chief executive officer, said the secret of Lockton’s success is its commitment to clients that the firm will be there for the long haul, providing professionalism and services to find solutions to their risk challenges.
“There are no rocks to hide under at Lockton,” said Mr. Lumelleau. “If you have not helped your client, you have not done your job.”