Glaser Returns To Marsh As New CEO, Seeking Turnaround In Softening Market

Marsh has tapped an AIG executive and former employee, Daniel S. Glaser, as its new chairman and chief executive officer. His task is formidable--to turn around a troubled firm challenged by the softening commercial insurance market and the surrender of some $1 billion in contingency fees following the settlement of bid-rigging charges that tarnished the mega-broker's reputation.

"I spent the first years of my career at Marsh," Mr. Glaser recalled in an interview with National Underwriter. "I met my wife at Marsh. I'm concerned what happened to it, and even though I'm realistic about the challenges that we face at Marsh, I've got a tremendous amount of optimism that we can put that right."

Last week, Mr. Glaser--the 47-year-old managing director of American International Group Europe (U.K.) Ltd., and the regional president of AIG's American International Underwriters' United Kingdom/Ireland division--was tapped to return to the brokerage firm that launched his career.

He begins his new job on Dec. 10, according to New York-based Marsh & McLennan, the parent company of Marsh. He replaces Brian Storms, who left the firm under a cloud in September.

"I'm very excited about [the appointment]," he said last week, noting that the courtship to take the position was not long. "I'm really chomping at the bit. Monday can't come soon enough."

Mr. Glaser began working in the insurance industry as a broker for Marsh in 1982. He was there for a decade, working in New York, London and Saudi Arabia. He moved to Willis for eight years, where he served as president and chief operating officer of Willis Risk Solutions, the firm's large-accounts practice.

In 2000, he joined AIG as president of the global energy division. In 2002, he was named managing director of AIG Europe (U.K.).

"Dan has broad expertise in the insurance industry as well as firsthand knowledge of the Marsh organization," said Michael G. Cherkasky, MMC's president and CEO, in a statement. "His perspectives as both a broker and an underwriter, coupled with his extensive international experience, make him the ideal candidate to take Marsh forward."

His leaving AIG had nothing to do with that company. Instead, it was an overriding desire to return to where he started, he said. "I've been training for the Marsh job for my entire life. It is the absolute premier brand in insurance broking. It is a great franchise and has a strong nucleus of talented people and terrific clients."

Since MMC gave up lucrative, volume-based contingent commissions in 2005 to settle a suit brought by New York's attorney general over allegations the firm engaged in steering contracts in return for kickbacks, the brokerage firm has struggled with profitability. A softening commercial market, driving down standard commissions for each account, hasn't helped.

As a result, for the third quarter, income from continuing operations was down 40 percent--or $53 million--to $80 million.

Mr. Glaser understands there are obstacles to returning Marsh to profitability, but he believes he is up to the task.

"Yes, we have some challenges, which probably at the end of the day is why I took the job," he said. "I think I can get in and work with the executive team and figure out the kinds of things we need to do to serve the customers better."

He said it is too early to talk about specifics, but the answers, he believes, will center on taking care of the firm's clients.

"We have to figure out what does the client value, and what do we do that the client doesn't value, which are basic Business-101 types of questions that will serve Marsh well," he said. "I will tell you that our strategy will ultimately be geared to serving clients."

He added that attention also needs to be paid to the people who service the client, with the proper tools put in place to accomplish that. "Marsh leadership will serve them and not the other way around," he vowed.

Mr. Glaser said Marsh will focus on the basics, making business less complicated and getting back to what it takes to retain clients and designing the revenue stream around that.

"The world is filled with complicators. I would work very hard to reduce complexity," he said.

On the issue of contingent commissions, Mr. Glaser said he is pained to see "the un-level playing field that exists"--with certain brokerages such as Marsh prohibited by legal settlements from accepting such fees, while competing firms face no such restrictions. "There should be some basic rules of the road" that everyone in the industry follows, he added.

But he also believes in complete transparency and disclosure, saying openness is "at the heart of any compensation arrangement."

"Anything we do will not challenge that fundamental principle, and at the end of the day the customer will determine what our earnings will be," he said.

Now living in London, Mr. Glaser will relocate to Marsh's New York headquarters. He said he will be commuting between New York and London for family reasons for a time before settling down permanently in the Big Apple.

One of Mr. Glaser's first challenges will be to re-engage the employee base that never bought into prior restructuring efforts under Mr. Storms, insurance specialist David Small of Bear Stearns said in an analyst's note. He will also have to deal with continued defections from the workforce, as well as ameliorating the feelings of senior executives who felt they should have been given his job, Mr. Small added.

Mr. Glaser will also have to tackle Marsh's "bloated cost structure," but considering the number of past efforts at restructuring, employees "may already have restructuring fatigue," warned Mr. Small.

Alain Karaoglan, an analyst with Bank of America, said in his commentary that Mr. Glaser's appointment was a positive development because of his background and understanding of the industry.

While Mr. Glaser will have to deal with financial challenges, Mr. Karaoglan said employees at Marsh should be more open to accepting him than they were his predecessor, Mr. Storms--who prior to joining Marsh was in benefits consulting and asset management, as opposed to Mr. Glaser's commercial insurance background.