Marsh McLennan Company CEO on M&A – “Our pipeline has by no means been higher”

Whereas insurance coverage merger & acquisition (M&A) exercise has been excessive for a few years, not less than one CEO isn’t apprehensive concerning the market being picked over. 

In truth, Marsh McLennan Company (MMA) chairman and CEO David Eslick (pictured) informed Insurance coverage Enterprise that the agency’s M&A pipeline “has by no means been higher.”

“There’s nonetheless some very nice-sized, high-quality corporations that we proceed to keep in touch with,” stated Eslick. “Final yr, we did extra offers than we’ve ever accomplished in our historical past.”

With some 10,000 staff in 170 places of work throughout North America, MMA supplies enterprise insurance coverage, worker well being & advantages, retirement, and personal consumer insurance coverage to organizations and people.

Following that deal, Eslick shared his views on the challenges within the M&A market, noting that credit score markets have been “pretty tight.”

“I feel there’s some actual adjustments,” he stated. “A number of our opponents for acquisitions, non-public equity-backed brokers, have seen their curiosity expense go up dramatically, which impacts their money stream.”

As a completely owned subsidiary of worldwide insurance coverage {and professional} companies agency Marsh McLennan, MMA isn’t held again by the credit score atmosphere, Eslick stated.

“I feel we’re higher positioned, frankly, than we’ve ever been [to continue with M&A],” he stated.

“Marsh McLennan is the friendliest monetary backer I’ve ever discovered within the trade. This allows us to not rely on credit score markets or anything to make choices on the correct acquisitions and to have the correct capital construction to try this.”

However Eslick additionally careworn that MMA would proceed to be a discerning a part of its M&A method.

“We predict we’re going to proceed to be lively, however we don’t do acquisitions to do acquisitions. We solely take a look at companions,” the CEO informed Insurance coverage Enterprise.

“We principally ask ourselves two questions: ‘Will they make us higher? Can we assist make them higher?’ And if the reply is ‘sure’ to each of these, then we’re going to take a look at a partnership.”

Onerous market underscores want for robust partnerships

Massive disaster losses which have led to carriers limiting enterprise or withdrawing from sure markets or states are making a difficult atmosphere for brokers.

Eslick stated MMA’s sources place it to help shoppers by arduous market circumstances and persevering with financial volatility.

“We all the time have issues for our shoppers and the dangers and the exposures that they’ve. However I feel it speaks concerning the success of Marsh McLennan Company that we now have been the place that our shoppers look to for that help due to our sources and capabilities, together with information and analytics,” he stated.

“We now have the largest information lake within the trade, and we might help our shoppers use that information to make goal choices about the kind of merchandise they want and the publicity that they might be keen to take.”

Moreover, MMA’s “main” place with its service companions helps it faucet into out there capability and create options for its shoppers.

“Along with that, we now have the most important reinsurance dealer on the planet with Man Carpenter. With our capacity to work with service companions and our backstop functionality, there’s no different dealer within the market that may try this with our dimension and with our scale, so it places us in an excellent place to unravel shoppers’ wants,” Eslick stated.

What are your ideas of Marsh McLennan Company’s M&A method and strategy to the arduous market? Inform us within the feedback.