Marsh Agencies To Pursue Acquisition For Quick Growth

With the backing of $500 million and a chief executive seasoned in the ways of mergers, Marsh & McLennan Agency LLC is preparing to line up acquisitions, which it sees as the fast-track way to grow the business.

Jack Butcher, president and chief executive officer of Marsh & McLennan Agency, said in an interview that with the financial arrangements put in place late last year, and the addition of David L. Eslick as chairman earlier this month, the unit is on its way to "accelerate our launch through M&A as opposed to the organic, which we will still pursue, but in terms of priority, I think with M&A we have a greater opportunity to move now."

In late October, New York-based Marsh & McLennan Companies announced the launch of Marsh & McLennan Agency, designed to serve the insurance needs of small and emerging U.S. companies.

The unit will conduct its business separately from its brethren, insurance broker Marsh, and offer customers commercial property-casualty, directors and officers liability, surety, employee benefits and personal lines products throughout the United States.

However, instead of relying wholly upon organic growth, Marsh & McLennan Agency has switched gears and is seeking to build its foundation with established agencies that have extensive capabilities and expertise but lack the financial power to grow.

Mr. Eslick, formerly the chief executive of Briarcliff Manor, N.Y.-based USI Holdings Corp., was instrumental in the firm's growth through acquisition. The broker went private in March 2007 and Mr. Eslick left the firm in November of that same year.

Since joining Marsh & McLennan Agency, Mr. Eslick said the agency recognized that in order for it to begin delivering earnings quickly to MMC, it would be necessary to acquire other agencies.

"The acquisition marketplace today, we think, is pretty ripe for our positioning," said Mr. Eslick. "One, we have an appetite; two, we have the ability to finance; and three, we have a track record of attracting good, quality organizations, bringing those together, integrating them and building something of significance."

He noted that from an M&A standpoint, a number of significant acquisition players in this field have either been acquired themselves or lost their appetite. Marsh & McLennan Agency will be stepping into a field where it believes the opportunity is significant.

Mr. Eslick said Marsh & McLennan Agency expects to make some initial platform acquisitions. He said the unit will look for "high-quality platform" agencies where it can offer those executives a partnership and lead position and the resources to those executives to continue making additional acquisitions within their territories and grow their firms.

"We are not looking for people who say they are done with this business and want to cash out," said Mr. Eslick. "We are looking for good, quality people who are looking to take their skills and capabilities to a whole other level. We are looking for partners."

Mr. Eslick said the agency will get going "fairly soon" but would not put a timetable on acquisitions and it will be opportunistic in choosing who it partners with.

As far as current small market size customers already in the Marsh brokerage portfolio, Mr. Butcher said while customers will not be forced into the agency, he believes they will see the benefit of being with the agency and eventually gravitate to that side.