LONDON-Sedgwick Group P.L.C. still is looking for a merger partner, if the partner can meet the broker's goals of expansion into emerging markets and increasing consulting revenues.

But Willis Corroon Group P.L.C., which some analysts consider a suitable match for Sedgwick, continues to dismiss a megamerger for itself.

Saying that a "second round" of consolidation was about to begin in the international brokerage sector after the merger activity of the past few months, Sedgwick Chief Executive Sax Riley added, "We still believe in consolidation, but it has to meet our strategy."

This strategy involves equalizing the group's revenues between insurance brokering and consulting. Five years ago, the split was 82% brokering and 18% consulting, while at the end of 1996 it was 62% and 38%, respectively.

The other main element of the strategy is to diversify revenues geographically, particularly on non-U.S. and non-U.K. business. Last year, 40% of Sedgwick's revenues came from the United States, 34% from the United Kingdom and 26% from the rest of the world. Sedgwick aims to derive revenues equally from these three categories.

For Sedgwick to consider a merger, "the culture has to fit," Mr. Riley said. To align with another company, "they have to be able to grow, increase their dividend and bring shareholder value."

Sedgwick continues to look for consolidation opportunities, he said.

Mr. Riley was speaking as the group unveiled a 5% rise in pretax profits for 1996 to (British pounds) 95.5 million ($163.5 million). Gross revenues rose 3% to (British pounds) 960.3 million ($1.51 billion) after improved results from each operating unit. The improvement is attributed to several factors: a 16% rise in trading profits, a 4% increase in brokerage revenue and fee income, acquisitions or expansion in a number of countries, and a reduction in interest payable.

However, commenting on the market, Mr. Riley said Sedgwick accepted that "excess capacity has become the norm" and that it must manage its business accordingly.

He added that the group's strategy "is not based on false hopes for an improvement in the rating environment but on developing and changing our business to meet, and profit from, prevailing and future market conditions."

U.S. pretax profits were little changed at (British pounds) 38.5 million ($60.4 million) from (British pounds) 38.9 million ($61.4 million) in 1995, with higher earnings from all units partly offset by a (British pounds) 1.25 million ($2 million) provision related to litigation from an asset sale in the 1980s. U.S. revenues improved 2% to (British pounds) 387.4 million ($608.2 million).

In contrast, Willis Corroon Executive Chairman John Reeve's "group vision" program has paid off handsomely. The program aims to change the organization's direction from traditional insurance brokerage to a greater emphasis on professional services, such as risk management. Willis Corroon reported a pretax profit of (British pounds) 91.6 million ($143.8 million), including profits of (British pounds) 2.5 million ($4.3 million) on the sales of three companies: Management Science Associates Inc. and Consumer Benefit Life Insurance Co. Inc. in the United States and Personal Performance Consultants Ltd in the United Kingdom. This profit was up 83% from the previous year, which had shouldered exceptional charges of (British pounds) 30 million ($47.4 million) for future runoff costs and other items. Continuing operations recorded an (British pounds) 89.1 million ($139.9 million) profit, up 13% from 1995.

Revenue increase was not so striking, up 3% to (British pounds) 725 million ($1.14 billion). Nevertheless, profits have been used to strike out long-term bank loans.

Three key areas affected the results: a (British pounds) 14.5 million ($22.7 million) profit commission from the group's Lloyd's of London members agency, Willis Faber & Dumas (Agencies) Ltd.; exchange rate movements erasing (British pounds) 3.1 million ($4.9 million) from the results; and (British pounds) 11.3 million ($17.7 million) in severance costs as a result of implementing the group's change program.

Exchange rate changes could be a continuing problem. "The recent rise in the value of the sterling against major currencies, particularly the U.S. dollar, will, if sustained, affect group results adversely," said Mr. Reeve. At the same time, he warned of the "continuing, frequently severe, falls in premium rates for most classes of risk."

Severance costs applied to about 1,100 people, more than half leaving as a result of non-continuing operations, and the balance under the "group vision" program. Mr. Reeve sees severance costs yielding operational cost savings for this year and beyond. During 1996, the broker reduced staff numbers in continuing operations by 11% to 9,116.

Commenting on the continuing consolidation in the brokerage community, Mr. Reeve said he saw no reason for Willis Corroon to merge with another broker and that it had been successful in implementing "the measures designed to restore the group's financial health."