Gallagher Arthur J. & CO (AJG)

"Insurance broker Arthur J. Gallagher & Co will continue to monitor developments on the U.S. withdrawal from the 2015 international agreement designed to deny Tehran the ability to build nuclear weapons, the company said on Friday.“Whatever the decision from the U.S. administration, we will take appropriate action in compliance with all applicable laws as is our customary practice, said Anna Rozenich, the company’s spokeswoman. AJG has British and Norwegian subsidiaries that have brokered insurance and advised clients on activities related to Iran’s oil and gas industry." (5/18/2018).

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According to its quarterly report filed with the SEC in 2018: "On May 8, 2018, President Trump announced his decision to re-impose secondary sanctions against Iran. In response, on June 27, 2018, OFAC revoked General License H, with a provision for winding down transactions previously authorized under General License H.

In light of the above, our subsidiaries intend to discontinue acting as an insurance broker in connection with insurance coverages previously authorized by General License H, prior to the conclusion of the applicable wind-down period."

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In third quarter 2018, our U.K. domiciled subsidiary, Arthur J. Gallagher (UK) Limited, acted as insurance broker in obtaining insurance coverage for activities related to Iran’s oil, gas and petroleum industries. This subsidiary assisted clients in obtaining insurance coverage for activities including the supply and transport of oil, crude oil, heavy fuel oil and gas to and from Iran, and the docking and loading of oil shipments in Iran. (SEC Filing, 2018).

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As stated in its quarterly report filed with the SEC: In the fourth quarter of 2017, our U.K. domiciled subsidiary, Arthur J. Gallagher (UK) Limited and our Norway domiciled subsidiary, Bergvall Marine AS, acted as insurance brokers and advised clients in obtaining insurance coverage for activities related to Iran’s oil, gas and petroleum industries. In June 2014, we acquired a business in the U.K. that, beginning in 2011, had assisted its client, Bimeh Iran Insurance Company (UK) Limited (Bimeh), obtain certain insurance policies. In March 2014, the predecessor business placed a 12-month employers liability policy for Bimeh, with a premium of £371. In March 2015, after the acquisition, one of our U.K. subsidiaries assisted Bimeh with the renewal of the policy for a further 12 months, at the same premium of £371 plus a £50 administrative fee (generating total gross revenue for our U.K. subsidiary of approximately $117 and net profit of approximately $23). The policy was not renewed when it expired in March 2016, and Bimeh is no longer a client of our U.K. subsidiary.

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According to its Quarterly report filed with the SEC in 2016: "In second quarter 2016, our U.K. domiciled subsidiary, Arthur J. Gallagher (UK) Limited (which we refer to as AJGUK) acted as insurance broker and advised clients in obtaining insurance coverage for activities related to Iran’s oil, gas and petroleum industries. AJGUK assisted clients in obtaining insurance coverage for a variety of activities in Iran, including insurance coverage for:

• the operation of offshore drilling rigs by Iranian companies;
• the supply of crude oil to and from Iran;
• the transport and storage of oil from Iran;       
• the shipment of heavy fuel oil to and from Iran;
• the docking and loading of oil shipments in Iran; and
• the operation of a vessel by an Iranian company to survey pipelines used for oil and gas."

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According to its Quarterly Report filed with the SEC in 2016: "In first quarter 2016, our U.K. domiciled subsidiary, Arthur J. Gallagher (UK) Limited (which we refer to as AJGUK) placed insurance coverage for shipments of Iranian crude oil, petroleum and petroleum products. These activities, which were conducted in compliance with applicable law, are being disclosed pursuant to Section 13(r) of the Exchange Act.

On January 16, 2016, the U.S. lifted the nuclear-related “secondary sanctions” imposed against Iran. In connection with this event, the U.S. Treasury Department’s Office of Foreign Assets Control (which we refer to as OFAC) issued General License H, which authorizes U.S.-owned or U.S.-controlled foreign entities to engage in certain transactions involving Iran that would otherwise be prohibited by section 560.215 of the Iranian Transactions and Sanctions Regulations.

Following OFAC’s issuance of General License H and pursuant to General License H, AJGUK engaged in two separate insurance transactions with entities based outside the U.S. that involved the placement of insurance policies that included coverage for shipments of Iranian crude oil, petroleum and petroleum products. The total revenue generated by these transactions was approximately €32,000 (or approximately $36,000). The net profit attributable to these placements is difficult to calculate with precision, but is estimated to be approximately €6,000 (or approximately $7,000). AJGUK currently intends to continue placing insurance policies that provide coverage for activities authorized by General License H."

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According to its Quarterly report filed with the SEC for fiscal year 2012: "In 1998, Heath Lambert Limited (which we refer to as HLL), domiciled and acting in the capacity of a reinsurance intermediary in the UK, placed a marine hull reinsurance contract with Bimeh Iran Insurance Company (UK) Limited (which we refer to as Bimeh) on behalf of a UK-based ceding insurer. A loss covered by the contract occurred that same year. We acquired HLL in May 2011. One month later, as part of winding down legacy matters, HLL submitted to Bimeh a claim for payment on the reinsurance contract. In June 2012, HLL received £9,353.00 (US$14,343.75) from Bimeh representing Bimeh’s portion of the claim due to the UK-based ceding insurer. We do not believe the placement of the policy, the submission of the claim or the receipt of funds was prohibited by U.S. laws or regulations. In July 2013, HLL offered to send these legacy reinsurance funds to the UK-based ceding insurer. The offer was declined by the ceding insurer due to Bimeh’s involvement. No revenue or profit was generated by HLL in handling or holding the funds. HLL intends to hold the funds in accordance with company policy and applicable laws until authorized with the appropriate license to remit payment to the UK-based ceding insurer."