Update: Marsh Completes Acquisition of HSBC Insurance Brokers

(This story is being retransmitted to clarify the first, third and twelfth paragraphs.)

Marsh Inc. said it has closed on the acquisition of HSBC Insurance Brokers Ltd., which it said will strengthen its presence in the United Kingdom, Asia and the Middle East, while also giving it a strategic partnership with HSBC Bank plc.

Also, Marsh is still on the prowl for other acquisitions this year, Dan Glaser, chief executive officer of Marsh Inc., told BestWire.

"We're an international company, not a U.S. multinational company," Glaser said. "This adds a lot of talent that will strengthen our position in the U.K., Middle East and Asia."

In December, Marsh said it would acquire HIBL, a subsidiary of HSBC Bank, for 135 million pounds (US$204 million) (BestWire, Dec. 18, 2009). HIBL is expected to bring in 130 million pounds in annual revenue.

Concurrent with this transaction, Marsh entered into an agreement as a preferred strategic partner to HSBC Bank, giving Marsh the opportunity to provide HSBC's clients insurance brokering and risk management services.

That arrangement "is a great benefit for us," Glaser said. "Not only does the bank become our client for both insurance and reinsurance, but we are working together in a joint effort to provide more broking services to HSBC's clients, both in private and commercial banking."

The acquisition is complementary to Marsh's existing operations, Glaser said.

HIBL is the ninth-largest broker in the United Kingdom, which is Marsh's second-biggest market (behind the United States). About 1,000 of HIBL's 1,400 employees are based in the United Kingdom.

Also, Marsh is heavily involved in the large account space, whereas HIBL is more involved in the middle market space. HIBL also has several speciality businesses, such as education, specie (which protects items in transit), and marine, Glaser said.

HIBL has "a relationship-based business that's a good fit for us. It's a home run for us," Glaser said.

The acquisition makes Marsh the largest broker in Hong Kong, an area Marsh has been focused on growing, Glaser said. It also boosts Marsh's presence in the Middle East.

Glaser said today's insurance market "is definitely a buyer's market, it remains very soft."

"I've been in the business so long, I think that as an insurance broker, it is best to plan around softer markets versus hardening markets. Usually the market is relatively soft, and it shows the competitiveness of the industry," Glaser said.

He said he didn't expect first-quarter catastrophe losses, including the Feb. 27 earthquake in Chile, to impact the entire insurance market in terms of pricing.

Marsh, a unit of Marsh & McLennan Cos. (NYSE: MMC) has more than 23,000 employees and offers services to clients in more than 100 countries. The company was ranked as the second-largest broker, behind Aon Corp., by 2008 brokerage revenues according to Best's Review.

(By Meg Green, senior associate editor, BestWeek: [email protected])