Top Brokers Ramp Up Acquisition Activities in Europe

Some of the top global insurance brokers, including Willis, Jardine Lloyd Thompson and Aon, have been active making acquisitions and forming partnerships in Europe.

London-based broker Jardine Lloyd Thompson Group plc recently said it would combine its retail brokering unit in Spain with the country's fourth-largest commercial insurance broker to form a brokerage partnership. The broker's JLT-Siaci Espana S.L. will be combined with March-Unipsa Correduria de Seguros, S.A.U. (Unipsa), a unit of Banca March, to form March-JLT (Best's News Service, Feb. 15, 2012).

After the transaction, JLT will have a 25% interest in the combined business, which will become a JLT Network Partner.

The transactions represent a continuation of JLT's "build out strategy" that it's been working on for a while to build its global footprint, said Mark Drummond-Brady, international chairman of risk and insurance for JLT, in an interview. JLT has a strong presence in Asia, Latin America and Canada but "had a gap" in its network in some of the larger, more established economies in Western Europe, he said.

Each country has rules around obligatory insurance and insurance that must be bought within the domestic market, so JLT must have transactional capability in these countries to be able to compete with the three major U.S. brokers on multinational accounts, Drummond-Brady said.

As JLT targets the insurance needs of multinational companies, it needs strongly branded operations in all the major world economies, he said. Recent deals closed in Italy and Spain "effectively complete" JLT's European roll-out of that network strategy, Drummond-Brady said.

Last month, JLT merged its Italian brokering business Jardine Lloyd Thompson S.p.A. with Marine & Aviation S.p.A , which has expertise in marine, aviation, reinsurance and high net worth lines, among others. It's one of the oldest insurance brokers in Italy, and since 1993 the operation has been a Lloyd's broker placing Italian wholesale and reinsurance business in the London market, according to JLT.

JLT now has a 25% interest in the newly formed joint venture, Marine & Aviation JLT. As part of the deal, JLT also acquired a 25% interest in Marine Aviation & General (London) Ltd. Marine & Aviation's operations generated net revenue of 9.5 million euros (US$12.4 million) in 2010.

At the end of 2011, JLT acquired Dublin-based commercial broker FBD Insurance Brokers Ltd. in a deal that would expand its agribusiness expertise and increase its activities in Ireland. The acquisition was made by JLT Insurance Brokers (Ireland) Ltd., the group's Irish subsidiary (Best's News Service, Dec. 30, 2011).

In December, Willis Italy, part of Willis Group Holdings (NYSE: WSH), acquired Broking Italia SRL, based in Rome, Italy, which focuses on employee benefits. Willis said Broking Italia is a leader supplemental pension programs.

"We do see a continuing consolidation of brokers across Europe — not just through acquisition, but also through formal alliances like broker networks," said Adam Garrard, CEO of Willis Continental Europe, in an email. "The business environment for all industries is becoming riskier and more complex.

"A broker needs to be able to offer a variety of services beyond the traditional and needs to be able to access markets all over the world," Garrard said.

Broking Italia is now part of Willis Italia. Willis has eight offices in Italy and more than 350 employees specializing in insurance brokerage for a spectrum of commerce and industry.

"Broking Italia's extensive experience in employee benefits and private pension funds will allow us to further strengthen our position in these areas, which are flagship businesses of Willis Group globally," said Guido De Spirt, co-CEO of Willis Italy, in a statement.

In January, Aon Corp. (NYSE: AON) said would move its corporate headquarters from Chicago to London to "provide greater access to emerging markets and take better advantage of the strategic proximity to Lloyd's and the London market as one of the key international hubs of insurance and risk brokerage," the company said at that time.

Last month, Aon reached an agreement with La Caixa, a leading financial institution in Spain, and Banca March, and acquired 80% of insurance broker GDS, with an option to buy remaining shares in the future. Financial terms weren't disclosed.

It's a joint venture with La Caixa, and La Caixa will continue to hold a stake in GDS "for the time being."

A spokesperson for Aon declined to comment.

The agreement "consolidates our firm's ongoing commitment to growth in Spain, especially in Catalonia and in the field of financial institutions, said Rafael Esteban, CEO of Aon Spain, in a statement.

Aon is the second-largest global broker behind Marsh & McLennan Cos., with $8.51 billion in total revenue, as ranked by Best's Review magazine.

Willis Group, the third-largest global broker, announced plans in 2009 to redomesticate to Dublin, Ireland, from Bermuda, but maintains headquarters in London, across the street from Lloyd's.

JLT ranked sixth on the Best's Review list (Best's News Service, July 1, 2011).

Of the top 10 global brokers, only two — Willis and JLT — are headquartered in London, according to Best's Review.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])