Norwalk HR firm OperationsInc joins national giant Arthur J. Gallagher

Jul. 3—With its two biggest rivals having toeholds in Norwalk, Arthur J. Gallagher is picking up one itself via the acquisition of OperationsInc, which similarly provides outsource HR services and training to a national clientele.

Gallagher is ranked by the trade publication Business Insurance as the fourth-largest insurance brokerage in the world, after Marsh & McLennan and Aon which both have offices in Norwalk; and Willis Towers Watson, which has locations in Stamford and Hartford. Gallagher reported a $608 million profit in the first quarter on revenue of more than $3.2 billion in revenue, a 20 percent increase from a year ago after a quartet of big acquisitions.

All four companies provide human resources consulting services as well. Gallagher had more than 7,200 people at last report in its global benefits and HR consulting division, of about 52,000 in all entering this year that represented an additional 8,000 people. Dating back to 2002, Gallagher has bought out more than 700 smaller companies to build up its insurance brokerage, risk-management and HR businesses.

OperationsInc adds nearly 70 people to that total in Connecticut along with nearly 80 more in other states, with CEO David Lewis telling CT Insider the company will maintain the Norwalk office going forward and that no layoffs are planned as an outcome of the transaction. He added that OperationsInc employees now have the opportunity for career advancement in a far larger company.

"The path we chose was to align ourselves with a firm that culturally is our twin," Lewis said in an interview. "The work that we do for everybody on a go-forward basis stays the same — it just gets bigger and it broadens out in many respects."

Gallagher did not disclose the size of the OperationsInc deal. The Illinois-based company has continued to be active on the acquisitions front in the first six months of 2024, spending more than $66 million for Ericson Insurance Advisors in the Litchfield County town of Washington; $128 million for the New Hampshire-based insurance brokerage Rowley Agency; and $181 million across 10 other deals.

Gallagher established its current Farmington office with the acquisition last November of WDK Benefits, and picked up a Shelton office via the 2019 buy of Merit Insurance there. Prior Connecticut acquisitions include American Wholesalers Insurance in Stamford, Everett James in Ridgefield, Joseph Distel & Co. in Farmington, L&R Benefits in Windsor and Life Plans Unlimited in Fairfield.

The buyout trail has included companies based elsewhere that have had Connecticut offices as well, such as a 2016 deal for Bollinger Insurance Brokerage in Greenwich office; William Gallagher Associates in Hartford; and Cowles & Connell in Meriden.

Gallagher also has an East Hartford office where it lists open jobs. A company spokesperson indicated that the OperationsInc acquisition pushes its Connecticut headcount to 120 people.

In a Tuesday conference call with investment analysts, a Gallagher executive said the company does not look for deals in which owners "turn over the keys" in cashing out, aiming instead for those leaders to stay on and help drive the combined company into new business lines, territories or initiatives.

"We are in the smart-people business — and where we can find more smart people who do really cool things, we want to do that," said Steve Coco, a managing director in Gallagher's employee benefits and consulting division who joined the company himself last year via an acquisition. "They can be a platform for growth within our organization."

Lewis has provided news organizations nationally with expert insights over the years, on topics ranging from recruiting, layoffs and remote working; to policies dealing with the specters of sexual harassment or workplace violence.

He has been a frequent critic as well of state and federal policies he has seen as doing more harm than good for employers or workers, with a ripple effect for the Connecticut economy. On the side, Lewis is founder of the CEO Roundtable, group of small business owners who meet regularly to discuss challenges faced by their businesses.

If a hodge-podge of HR requirements was the biggest challenge facing his firm and by extension its clients in 2001 when Lewis started OperationsInc in Stamford, today it is the ongoing juggling of remote working policies that were rushed into place during at the outset of the 2020 pandemic.

"Instead of saying 'let's get our managers trained better so they know how to manage on a metrics-centric model,' it's 'let's bang our fists on the desk and tell everybody they have to get ... into the office more," Lewis said. "And that completely backfires, because in an effort to get people back in so you can supposedly solve the issue of managing these people, you wind up creating a turnover issue, because these people ... have other options and are pursuing them."

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