The lawsuit filed by Arthur J. Gallagher against the former CEO of its international brokerage operation, David Ross, who defected to Towergate earlier in the year – has been settled for a payment of £20 million ($30.9 million).
Gallagher filed the suit in March 2015 in the High Court after Ross, who had led its international division for 10 years, announced in February that he was leaving the broker to take up the post of chief executive officer for rival Towergate, even though he had a year long non-compete clause.
Shortly thereafter, a group of his former colleagues also left Gallagher to join Towergate, including (in alphabetical order) Adrian Brown, Sarah Dalgarno, Janice Deakin and Mark Mugge.
Brown, who was former executive chairman of underwriting and distribution at Gallagher, will become Towergate’s chief operating officer. Dalgarno, former chief risk officer at Gallagher, will take on the same position at Towergate. Deakin, who was CEO of UK retail at Gallagher, is the new retail broking director at Towergate. Mugge, who was CFO at Arthur J. Gallagher International, is now Towergate’s CFO.
Along with Ross, Mugge was named in the Gallagher suit, as was Christopher Keey, a consultant, but not a Gallagher employee.
As part of the settlement, Towergate has agreed to pay £4 million ($6.2 million) in August 2015 and £4 million in April 2016 for cessation of all litigation proceedings. The remaining £12 million ($18.5 million) of the settlement will be paid by majority owners, Highbridge Capital Management in two £6 million ($9.3 million) segments in August 2015 and April 2016.
Highbridge is the alternative investments arm of JPMorgan, which, along with other creditors, took over Towergate in February to restructure its £1 billion ($1.5 billion) debt burden.
As a result of the settlement, Gallagher agreed to the early release from his contract of Ross, who will join the firm on November 1, 2015 as chief executive officer, subject to regulatory approval, while Brown will join the firm on September 14.
“We are pleased that the High Court proceedings initiated in March 2015 between Arthur J Gallagher, David Ross and others have been settled, enabling Towergate to focus its full attention on successfully growing its business,” said a statement from Towergate, adding that “a prolonged period of uncertainty for the firm has been averted.”
Scott Egan, interim chief executive officer, will leave Towergate on September 14 to become group chief financial officer of RSA Insurance Group plc, at which time Adrian Brown become interim CEO* for a six-week period until Ross joins the company, when Brown will take up the position of chief operating officer, Towergate said in a statement.
The broker said its leadership team has been strengthened over the past few months by the arrival of Janice Deakin as retail broking director, Mark Mugge, as chief financial officer, while Sarah Dalgarno joins as chief risk officer* on September 4.
“I am very pleased that a settlement has been agreed between a number of incoming executives and Gallagher, bringing much needed clarity to the management of the Towergate business,” said Chairman John Tiner.
“With all of these appointments alongside our existing leaders we will have an outstanding executive team, whom I am confident will lead the business to sustained success in the future,” he added.
Commenting on Egan’s departure next month from Towergate, Tiner said: “He successfully steered the business through the financial restructuring, galvanized our people during a vulnerable period and oversaw some major changes to the business. His commitment to Towergate has been exemplary. We wish Scott all the best in the next phase of his career.”
* Subject to usual regulatory approvals
*This article previously appeared in our sister publication Insurance Journal.