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, at the very least one CEO isn’t frightened concerning the market being picked over. 

The truth is, 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 finished in our historical past.”

With some 10,000 staff in 170 workplaces throughout North America, MMA gives enterprise insurance coverage, worker well being & advantages, retirement, and personal shopper 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 modifications,” he stated. “Plenty of our rivals for acquisitions, non-public equity-backed brokers, have seen their curiosity expense go up dramatically, which impacts their money circulate.”

As an entirely owned subsidiary of world insurance coverage {and professional} companies agency Marsh McLennan, MMA isn’t held again by the credit score setting, 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 permits us to not depend on credit score markets or the rest to make choices on the fitting acquisitions and to have the fitting capital construction to try this.”

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

“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 mainly 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 have a look at a partnership.”

Laborious market underscores want for sturdy partnerships

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

Eslick stated MMA’s sources place it to assist purchasers via arduous market circumstances and persevering with financial volatility.

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

“We now have the most important information lake within the trade, and we can assist our purchasers use that information to make goal choices about the kind of merchandise they want and the publicity that they might be prepared to take.”

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

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

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