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, a minimum of one CEO isn’t frightened concerning the market being picked over. 

Actually, Marsh McLennan Company (MMA) chairman and CEO David Eslick (pictured) advised 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 companies that we proceed to keep up a correspondence with,” mentioned Eslick. “Final 12 months, we did extra offers than we’ve ever finished in our historical past.”

With some 10,000 staff in 170 places of work throughout North America, MMA gives 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 had been “pretty tight.”

“I feel there’s some actual adjustments,” he mentioned. “Numerous our rivals for acquisitions, non-public equity-backed brokers, have seen their curiosity expense go up dramatically, which impacts their money movement.”

As an entirely owned subsidiary of worldwide insurance coverage {and professional} providers agency Marsh McLennan, MMA isn’t held again by the credit score surroundings, Eslick mentioned.

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

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

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

“We expect we’re going to proceed to be energetic, however we don’t do acquisitions to do acquisitions. We solely take a look at companions,” the CEO advised 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.”

Laborious 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 surroundings for brokers.

Eslick mentioned MMA’s assets place it to assist shoppers by means of onerous market circumstances and persevering with financial volatility.

“We at all times 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 assist due to our assets and capabilities, together with information and analytics,” he mentioned.

“We now have the most important information lake within the trade, and we can assist 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 accessible 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 capability to work with service companions and our backstop functionality, there’s no different dealer within the market that may try this with our measurement and with our scale, so it places us in an excellent place to resolve shoppers’ wants,” Eslick mentioned.

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