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

While insurance coverage merger & acquisition (M&A) exercise has been excessive for a few years, no less than one CEO isn’t anxious concerning the market being picked over. 

In reality, Marsh McLennan Agency (MMA) chairman and CEO David Eslick (pictured) advised Insurance Business that the agency’s M&A pipeline “has never been better.”

“There’s still some very nice-sized, high-quality firms that we continue to be in contact with,” stated Eslick. “Last year, we did more deals than we’ve ever done in our history.”

With some 10,000 workers in 170 workplaces throughout North America, MMA offers 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 had been “fairly tight.”

“I think there’s some real changes,” he stated. “A lot of our competitors for acquisitions, private equity-backed brokers, have seen their interest expense go up dramatically, which impacts their cash flow.”

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

“I think we are better positioned, frankly, than we’ve ever been [to continue with M&A],” he stated.

“Marsh McLennan is the friendliest financial backer I’ve ever found in the industry. This enables us to not rely upon credit markets or anything else to make decisions on the right acquisitions and to have the right capital structure to do that.”

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

“We think we’re going to continue to be active, but we don’t do acquisitions to do acquisitions. We only look at partners,” the CEO advised Insurance Business.

“We basically ask ourselves two questions: ‘Will they make us better? Can we help make them better?’ And if the answer is ‘yes’ to both of those, then we’re going to look at a partnership.”

Hard market underscores want for sturdy partnerships

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

Eslick stated MMA’s assets place it to help purchasers by means of exhausting market circumstances and persevering with financial volatility.

“We always have concerns for our clients and the risks and the exposures that they have. But I think it speaks about the success of Marsh McLennan Agency that we have been the place that our clients look to for that support because of our resources and capabilities, including data and analytics,” he stated.

“We have the biggest data lake in the industry, and we can help our clients use that data to make objective decisions about the type of products they need and the exposure that they would be willing to take.”

Additionally, MMA’s “leading” place with its provider companions helps it faucet into accessible capability and create options for its purchasers.

“In addition to that, we have the largest reinsurance broker in the world with Guy Carpenter. With our ability to work with carrier partners and our backstop capability, there’s no other broker in the marketplace that can do that with our size and with our scale, so it puts us in a very good position to solve clients’ needs,” Eslick stated.

What are your ideas of Marsh McLennan Agency’s M&A technique and strategy to the exhausting market? Tell us within the feedback.