Marsh & McLennan Aims for Growth With Acquisition of U.K. Insurance Broker
September 18 2018 - 8:01AM
Dow Jones News
By Philip Georgiadis and Adam Clark
LONDON -- Marsh & McLennan Cos. has agreed to a GBP4.3
billion-pound ($5.66 billion) deal to buy U.K.-based Jardine Lloyd
Thompson Group PLC, forming a global insurance broker with $17
billion in annual revenue.
The deal will allow Marsh & McLennan to tap into Jardine
Lloyd Thompson's exposure to high-growth emerging markets and comes
as the insurance industry experiences a wave of consolidation.
Many global insurers are looking beyond their already
well-insured home markets for growth, and Marsh & McLennan said
the deal will strengthen its specialty risk-broking operations and
expand its global reinsurance network, bolstering its position in
key growth markets in Asia and Latin America.
While Marsh & McLennan currently derives 10% of its revenue
from the fast-growing Asia Pacific region, Jardine Lloyd Thompson
has far more exposure in a region which accounts for more than a
quarter of its revenues, according to brokerage firm Olive Tree
Financial.
The deal is one of the most significant in the insurance
brokering sector since the $18 billion tie-up between Willis Group
Holdings PLC and Towers Watson & Co. in 2015. Several landmark
deals have been announced so far this year as insurers grapple with
changing regulatory requirements, falling prices and shifting
customer behavior.
Earlier this year, British insurer Prudential PLC split itself
into two, allowing one of its arms to chase high-growth emerging
markets, while French giant AXA SA paid more than $15 billion to
buy XL Group, a Bermuda-based property and casualty firm.
Marsh & McLennan said it would accelerate Jardine Lloyd
Thompson's growth in employee-benefits provision and its U.S.
expansion, and that its revenue is expected to increase to around
$17 billion following the deal, from around $14 billion currently.
The deal is expected to result in annual cost savings of $250
million over the next three years.
Marsh & McLennan said it expects to cut between 2% and 5% of
the combined workforce of the two companies across all geographies,
with the one-off costs of integration estimated at $375
million.
Jardine Lloyd Thompson's independent directors have recommended
the deal to the company's shareholders.
Marsh & McLennan has received a commitment to support the
bid from Jardine Matheson Holdings Ltd., which has a 40% stake in
Jardine Lloyd Thompson. In a separate statement, Jardine Matheson
said it would receive net proceeds of GBP1.7 billion from the
deal.
The deal is expected to close in spring 2019, subject to
shareholder and regulatory approval.
Following the deal, Jardine Lloyd Thompson's Chief Executive
Dominic Burke will join Marsh & McLennan as vice chairman and
serve on its executive committee.
Write to Philip Georgiadis at philip.georgiadis@wsj.com
(END) Dow Jones Newswires
September 18, 2018 07:46 ET (11:46 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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