Marsh to Boost Market Presence With HSBC Insurance Brokers Acquisition

Insurance Broker Marsh Inc. is building a broader client and product portfolio to tap into growing business in the Asia-Pacific region with the acquisition of HSBC Insurance Brokers Ltd. and the formation of a preferred strategic partnership with HSBC.

The acquisition is an important strategic driver for Marsh, an international insurance broker, not just for the takeover of the business but also the access to HSBC's clients base and network, said Alex Moczarski, president of Marsh's international division.

The growth opportunity from this transaction is important to Marsh, said Moczarski in an interview. After the takeover, Marsh's Hong Kong presence will be doubled and operations in Singapore and China will be significantly increased.

In the United Kingdom, the acquisition of HSBC Insurance Brokers will increase Marsh's revenue by about 30%, together with an expansion of its footprint and operations in that country. The takeover will also enhance the broker's operations in the Middle East, according to Moczarski.

"This is a strong complementary fit and will deepen our global presence in high growth areas," Moczarski said. The strategic partnership will enable Marsh to access the global bank's corporate and private clients base, he said.

With a growing business in Asia, Marsh can now deliver to comprehensive client segments and product services. HSBC's client portfolio is "definitely" important for Marsh in Asia, and the small to medium enterprise segment is part of the growth plan, said Alan Cheah, chief executive of Marsh Asia, in an interview.

Business from HSBC Insurance Brokers in the middle market is one new area of focus for Marsh, according to Moczarski. HSBC Insurance Brokers has a wide spectrum of business from small to medium sized companies through highly developed networks.

The acquisition of HSBC Insurance Brokers advances Marsh's position in third-party business generated through the accident, health and contingency, cargo, specie and North American practices. The specialist business will be managed through Marsh's unit Gibbs Hartley Cooper.

London-based HSBC Insurance Brokers has offices in Hong Kong, China, India, Singapore, South Korea, Taiwan and Vietnam. The merger is expected to be completed in the first quarter of 2010.

Asia Strategy

Marsh will concentrate its initiatives in the development of markets such as Indonesia, Malaysia and Thailand, in which HSBC Insurance Brokers has no presence, said Cheah.

Asia is a competitive market but the business outlook is "bullish" with an increasing demand for top-quality risk advice and specialist business, according to Moczarski. Singapore and Hong Kong are major markets with increasing growth potential.

As many Asian companies are expanding overseas to acquire new business and resources, Moczarski noted there are lots of demands for risk services in business areas such as distribution, retail and logistic.

The Asian market is becoming more global and there is plenty of capacity in the region. "We are accessing the market in Japan from California and [the business] is becoming more and more global," Moczarski said.

Marsh is eyeing more diversified business development as a driver for insurance brokerage services across Asia, supported by a greater need for enterprise risk management. The increasing sophistication of business in Asia will boost demand for diversified services, said Cheah.

In Asia, infrastructure, marine, logistics, supply chain, directors and officers and product liability are some of the big business lines for Marsh. Business comes from both local, regional and international coverage, according to Moczarski. Marsh now has over 50% of the business that is not coming from the United States and Canada, he said.

China and India

China and India are two important emerging markets in the region. Although the level of sophistication is still not that high in China, Cheah said Marsh is investing in the market through training and operations to grow the business. With a wholly-owned foreign enterprise insurance brokerage license, Marsh has 200 employees and 10 branches in China.

Marsh is investing heavily and is increasing number of branches in India, where the market shows "exciting" growth areas, according to Moczarski. Currently, Marsh owns a 25% stake in its local venture and the company is "cautiously optimistic" that regulatory change will allow higher foreign investment.

In the coming year, Moczarski said the state of reinsurance and insurance market remains competitive globally. In Asia, market conditions are soft, supported by a benign year for windstorms. In most business lines, Moczarski noted there has not been much activity to boost pricing. Rates will be flat or reduced for most lines in Asia.

Marsh, an unit of Marsh & McLennan Companies, has more than 23,000 employees and offers services to clients in more than 100 countries. In Asia, the insurance broker has offices in China, Hong Kong, Indonesia, Japan, South Korea, Macao, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

In 2008, Marsh reported a 10% rise in revenue to US$412 million from Asia, compared with 6% growth in total international revenue, to US$2.37 billion. Its total global business increased 4% to US$4.52 billion, according to the group's 2008 annual report.

(By Iris Lai, Hong Kong bureau manager: [email protected])