MONACO–Ratings agencies here said they are not overly concerned about the shrinking number of reinsurance brokerages, but Lloyd's chief executive officer expressed uneasiness over announced merger plans for Aon and Benfield.
Richard Ward, Lloyd's CEO, told National Underwriter that he is "always concerned when any one player has a dominant position in a market–and it's very important they don't abuse that."
"The Aon-Benfield merger we watch with interest. The stats I heard were that they'll have market share of about 45 percent, with Guy Carpenter claiming 27 percent and Willis Re claiming 18 percent of market share," he said.
What this means to the industry, Mr. Ward explained, is that "a large proportion of the brokerage market is in the hands of three brokers. It's a big share of the broker reinsurance market."
He predicted that as a result of the merger, "We'll see other brokers trying to catch business from Aon-Benfield and exploit the uncertainty the merger will create in the minds of clients and staff for a short while."
Meanwhile, three ratings agencies here–A.M. Best, Moody's and Standard & Poor's–said in press conferences they don't believe the merger will be detrimental to the industry in the long term.
John Andre, A.M. Best group vice president, said there are a few negatives but there also are benefits to the merger. He added that a benefit to brokers not involved in the transaction is that they may see business "spilling off" to them. He also said the merged brokers would see reduced costs.
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