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Top insurance brokers, No. 1: Marsh McLennan

Martin South

2022 brokerage revenue: $20.66B
Percent increase: 4.1%

Marsh & McLennan Cos. Inc. delivered 9% organic growth last year, surpassed the $20 billion revenue mark and continued to pursue acquisitions, expanding its middle-market and international business. 

Internally, the New York-based brokerage restructured, consolidating real estate, aligning its workforce and rationalizing technology. John Doyle, previously president and CEO of Marsh LLC, its main brokerage unit, took over as president and CEO of Marsh McLennan on Jan. 1, 2023. 

A decline in overall insurance sector mergers and acquisitions activity last year did not dampen Marsh McLennan’s long-held acquisition strategy. The company completed 20 acquisitions in 2022, many of them through Marsh & McLennan Agency LLC, its middle-market unit, according to SEC filings. 

Last year’s deals included the acquisition of Hunt Valley, Maryland-based HMS Insurance Associates Inc., a top 100 brokerage with about $50 million in annual revenue. 

Marsh also made several international purchases last year, including in Chile and Japan, and increased its stake in a Morocco-based brokerage. 

In this year’s second quarter, its reinsurance brokerage unit, Guy Carpenter & Co. LLC, said it would acquire Israel-based Re Solutions. 

“We have a good pipeline of acquisitions. We look to companies that will make us better, grow faster, and in countries and geographies and segments where we would like to do it,” said Martin South, president and CEO of Marsh. The number of acquisitions completed by Marsh McLennan Agency since it was formed 15 years ago has crossed the 100 threshold, he said.

The deals helped Marsh McLennan grow its brokerage revenue to $20.66 billion in 2022, a 4.1% increase over 2021, and retain its No. 1 position in Business Insurance’s ranking of the world’s largest brokerages. 

In the first quarter of this year, its insurance and reinsurance broking units posted a combined 9% underlying growth rate, buoyed by continued rate increases, new business and strong retention despite the uncertain economic backdrop. 

Last year’s revenue growth was “solid” albeit lower than the double-digit revenue growth delivered in 2021, analysts say.

Marsh McLennan saw good growth in its insurance and reinsurance broking business in 2022 and in the first quarter of this year, said Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York. 

The reinsurance market is as hard as it’s been in about 20 years and rate hikes at Jan. 1 persisted during the April and June renewal seasons, which “should be a tailwind” to organic revenue growth for Guy Carpenter, Ms. Greenspan said. 

Broking growth should help offset any slowdown in the company’s consulting operations due to economic contraction, she said. 

Cyber, construction and credit specialty areas have been significant growth drivers, but Marsh saw its representations and warranties and transactional risk business slow due to rising inflation and interest rates and the pullback in capital markets, Mr. South said. 

Marsh has made progress in using artificial intelligence for data extraction and policy comparisons and will launch a version of ChatGPT later this year within the company’s firewalls, Mr. South said. “We’ve got a number of pilots underway, but I don’t think it’s at a stage yet where the accuracy is to be relied upon,” he said. 

A restructuring program announced in January is slated to deliver around $300 million of savings by 2024, at a total cost of $375 million to $400 million, Mr. Doyle said on the company’s first-quarter earnings call with analysts. 

Marsh McLennan is adjusting expenses to what is expected to be a more sluggish pricing environment should the economy weaken, said Mark Dwelle, director, insurance equity research, at RBC Capital Markets LLC in Richmond, Virginia. “I view it mostly as periodic housekeeping,” Mr. Dwelle said. 

Marsh McLennan has hired more than 10,000 employees in the past two years, including over 6,000 at Marsh, and will hire at similar rates in future, Mr. South said. 

“Like any professional services firm we can lose some talent, but there's no question over the last few years we've been a net gainer,” he said. Voluntary turnover has decreased slightly, perhaps due to the tight economy, which will slow down hiring, Mr. South said. 


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