Now that the dust has settled following the historic merger of giant broker Marsh and Jardine Lloyd Thompson, the transaction’s impact on the two firms’ reinsurance broking units, Guy Carpenter and JLT Re, is resetting the table for all reinsurance brokers.
Executive SummaryMarsh execs are upbeat about the merger of their Guy Carpenter with JLT Re. There appear to be opportunities to achieve significant economies of scale. That's good news for Marsh, but reinsurance brokerage consolidation may not be the best news for some carriers because it reduces the opportunities to shop around their business to get the best possible deals. Smaller brokers are hoping to pick up some of the talent leaving the big firms and gain access to some of the business.
Guy Carpenter, as the merged reinsurance brokerage entity will be called, has fortified its position alongside Aon Reinsurance Solutions and Willis Re as the Big Three. The trio of reinsurance brokers effectively dwarf the capital size and clout of competitors. However, since the merger between the parent firms is predicated in part on acquiring economies of scale through labor attrition, the likelihood is that many former employees of both reinsurance brokers are (or will be) available for hire.
These skillsets include mid-level and higher-ranking executives, as well as line brokers with longstanding, lucrative client relationships. Assuming smaller competitors snap up this talent, the opportunity exists to enhance operations and bulk up market share to boot. “There’s a large amount of people leaving and going elsewhere,” said Toby Esser, chairman of Next Generation Group, holding company for AFL Insurance Brokers.