Lockton plugs gap in South Africa with creation of new brokerage

Lockton and Johannesburg privately-held firm First Equity Risk Management Services announced their intention to form the new joint venture company earlier this week on terms that were not disclosed. The joint venture company will be registered in South Africa and will have directors from both Lockton and First Equity on its board.

Lockton has a history in South Africa and needed to find a partner to service its international business with operations in the region after Marsh snapped up Alexander Forbes in September of this year.

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London-based Lockton International was formed back in 2006 after the privately-held US brokerage bought the London-based international business of Alexander Forbes—Alexander Forbes International Risk Services—to form what has become the largest privately-held international brokerage in the world. The international arm is headed up by Mike Hammond and Julian James.

The combination of AFIRS business and the relationship with Alexander Forbes enabled Lockton to offer local service to international companies active in the region and also target local business.

But when Alexander Forbes was sold to Marsh in September it left Lockton without a meaningful presence in the region.

Lockton said that the new venture will be able to service Lockton’s retail insurance clients in South Africa and added that Lockton First Equity will also seek to combine Lockton’s and First Equity’s ‘reputations and commercial capabilities’ to generate new business in South Africa.

Commercial Risk Europe asked Lockton why it decided to partner with First Equity rather than buy the firm. “We had an established presence in South Africa through Alexander Forbes. The sale of that business meant we decided to look for a retail partner there in order to continue our global service offering. We looked at a number of really good brokers, and First Equity really stood out. We wanted to establish a joint venture in order to leverage Lockton’s global network and First Equity’s commercial capabilities in South Africa,” stated the firm.

“We already have a lot of clients with significant South African operations, especially in the mining and power sectors, and they need strong support. Our key aim is to be able to offer them on the ground support and service so the combination of First Equity’s in-depth knowledge of the South African market and Lockton’s large global network should be a very powerful one,” continued Lockton.

And the creation of the new operation on the ground will be critical for corporate insurance buyers with European and international companies that are interested in the region, stated Lockton. “As customers seek to grow their businesses into new and emerging markets, they inevitably look for risk management partners who are able to deliver both the technical expertise on building programmes and the on the ground knowledge of the places they are doing business. If European and other global clients have an interest in South Africa then they will interact with Equity First as this joint venture will be Lockton’s representative in the country,” the brokerage told CRE.

Commercial Risk Europe will attend and report from this year’s annual conference of the Institute of Risk Management South Africa (IRMSA) on November 23 and 24 where CRE Editor Adrian Ladbury will give a speech to report the findings of our recently completely annual Risk Frontiers and Risk Distribution surveys. To find out more about this event and register to attend please go to www.irmsa.org.za.