NU Online News Service, Oct. 4, 2:46 p.m. EDT
COLORADO SPRINGS, COLO.– Marsh & McLennan Agency remains on track to be a "significant player" in the brokerage business and is primed for additional growth plans, its chief executive said.
Attending the 97th annual meeting of the Council of Insurance Agents & Brokers (CIAB) in Colorado Springs, David L. Eslick, chairman and chief executive officer of Marsh & McLennan Agency, told NU Online News Service that the firm is on track with its growth plans, primed to make additional moves to augment the capabilities of its foundation partners, and one day may be among the top five insurance brokerage firms in the country.
"We are absolutely where we wanted to be, and we are very confident in hitting our milestones," said Mr. Eslick.
Between Nov. 2009 and May 2010, Marsh & McLennan Agency made five acquisitions throughout the United States, with total revenues around $200 million. With the foundation in place, the next move is to fold in acquisitions targeting agencies with $1-to-$10 million in revenue. The idea will be to build out the capabilities of the agencies that make up Marsh & McLennan Agency today, Mr. Eslick said.
For instance, Mr. Eslick noted that Bostonian Group, acquired in May, is primarily an employee benefits operation. The plan now is to make acquisitions to complement the firm and grow its property and casualty offerings.
He said 10 percent of the business today is personal lines and 20-to-25 percent is in employee benefits. The primary aim of the agency is to deal with commercial accounts that do not have risk managers and to build a relationship of trust with the "C" suite clients.
Marsh & McLennan Agency's philosophy is not to become the risk manager or risk advisor to the client. Instead, Mr. Eslick described it as a conversation with the client to understand the impact of risk and coming up with ways to cut risk either by eliminating it or reducing the exposure. Where risk cannot be eliminated, then the next step of "insuring with a third party" comes into play.
"That conversation needs to be had today in talking with these businesses," he said.
He said the value that the agency brings to the table is a local feel for clients partnered with the world class resources that Marsh and Marsh & McLennan Corp., as the parent companies, can offer clients.
As the firm builds, Marsh & McLennan Agency is not ignoring organic growth, but that is not the primary focus right now, and over the next three-to-four years a significant part of the growth strategy will be on acquisition, he said.
One thing Mr. Eslick stressed is that Marsh & McLennan Agency is not destined to become a spin-off opportunity.
"We are looking to build for significant value for decades to come and to remain an ongoing contributor to Marsh & McLennan Corporation for years to come," said Mr. Eslick. "We want a major market position and to be a great growth engine for Marsh for decades to come."
State of the Market
Turning to the current state of the insurance marketplace, he said there is no reason to believe that any turn in the soft market will be happening soon. It is difficult to judge at what point insurers will reach a point where they can no longer take reserves down and need to push prices up, he said.
A lot of competition remains in the marketplace, he noted, and there is no sign of it slowing down.
"There are a lot of smart people with differing views around it," he said, adding that it will be up to insurers to determine what makes the most sense going forward.
One thing that has changed dramatically, and is intensifying the competition, is the access to capital, Mr. Eslick noted. Twenty years ago, it was primarily the United States. Today, Bermuda and other markets are willing and able to make capital available and continue to fuel the soft market, he said.
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