NU Online News Service, June 30, 2:19 p.m. EDT

Chief executives from seven of the most active insurance brokerage acquisition firms say they see a bright future ahead for the insurance industry, as clients rely more and more on their expertise in risk transfer and employee benefits in an increasingly complex environment.

The seven sat for a panel discussion during the Reagan Consulting bi-annual Mergers and Acquisition Conference attended by more than 130 insurance executives.

Participating in this conference discussion was:

• David Eslick, chairman, Marsh & McLennan Agency.

• Marty Hughes, chairman and chief executive officer of Hub International.

• Wade Reece, chairman and CEO of BB&T Insurance Services.

• Dave Zuercher, executive vice president and group head of insurance services for Wells Fargo.

• Pat Gallagher, chairman and CEO of Arthur J. Gallagher.

• Mike Sicard, chairman, president and CEO of USI

• Powell Brown, CEO of Brown & Brown.

“The world is getting riskier,” says Gallagher. “The need for risk consultancy and risk mitigation will only continue to grow.”

“The outlook for the future of our industry is very bright,” adds Eslick. “The combination of growing complexity of risk and regulatory involvement makes the need for resource-rich advisors even more critical for businesses of all sizes.”

“The future continues to look promising for those who remain entrepreneurial and nimble,” says Hughes.

“Clients are looking for ways to reduce their cost structure and need our expertise,” notes Reece.

“The core fundamentals of the industry remain strong: It’s a ‘required’ spend by clients,” says Sicard.

“Given the state of litigation and the nature of risk insurance, risk management and transfer of risk will continue to be important elements in any successful business,” Zuercher says.

Brown says the future holds “great changes in its landscape.” He adds that, “There will be continued consolidation in the agency community and to a lesser degree in the carrier community.”

The brokers say they see no reason for let-up in their strategy to acquire other agencies based on their appetite and strategic fit.

Eslick says his firm, a subsidiary of Marsh & McLennan Companies which began operation a few years ago, will seek to establish itself in “a number of geographic regions” as platforms for additional growth.

Touching on employee benefits, all the brokers see changes ahead and the need for their expertise with the onset of changes in the healthcare law.

“The employee benefits practice five years from now will look very different from today,” says Reece. “It will be more value-added, consultative services than we do today.”

However, it also means smaller firms in this area will not survive.

“I believe that all small employee benefits practices are a thing of the past,” Gallagher says. “This law is too complicated for the small employee benefits person to be able to deal with on any group of any size over 100 lives. We believe that under 100 lives, these groups will move to the exchanges.”

All said they remained interested in acquisitions of employee benefits operations.

“We are not shying away from employee benefit practices, but we are being very careful about what we value,” Reece says.

“We will look at employee benefits operations, but we will discount small group business,” says Hughes.

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Active Acquirers Eye A Bright Future For Brokerage Industry

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