MMC Says It Has No Interest In Buying Benfield

Marsh & McLennan Companies said it has no interest in acquiring reinsurance broker Benfield Group, after reports surfaced the company was planning to make a counteroffer to Aon's planned acquisition.

Over the weekend, London's Sunday Telegraph as well as Reuters reported that New York-based Marsh & McLennan planned to make a counterbid for Benfield, after Chicago-based insurance broker Aon said last month it would acquire the reinsurance broker for $1.75 billion.

A company representative told National Underwriter that, “MMC has no interest in putting forth a counter bid for Benfield.”

The Sunday Telegraph said MMC had made a fully-funded offer before Aon made its approach, and that the firm was assessing another move.

For its part, a representative for Aon said by e-mail: “We don't comment on what others may or may not do. That said, Greg Case [Aon Corp. president and chief executive officer] and Grahame Chilton [Benfield CEO] had a great week, meeting some 1,200 Benfield colleagues, who responded positively to the prospect of an Aon-Benfield partnership.”

Meanwhile, Myer Shields, an analyst for Stifel Nicolaus, said the combination of MMC (owner of insurance broker Marsh and reinsurance broker Guy Carpenter) and Benfield did not make much sense.

He reasoned that because there is more overlap between Guy Carpenter and Benfield, MMC would pay more and get less for the deal.

Mr. Shields also noted that Aon has more financial flexibility to make such a deal. He added that he believes while MMC is in the middle of reorganizing itself, Aon “faces fewer internal distractions, which reduces the risk of integration-related errors.”

Mr. Shields also noted that shrinking the number of global reinsurance brokers from three to four would give the remaining three “greater pricing power and significant…competitive advantages relative to smaller competitors.”