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LONDON-The two biggest London-based brokers-Willis Corroon P.L.C. and Sedgwick Group P.L.C.-continue to dampen speculation they will merge with each other, though they do not rule out closer ties with other brokers.
Comments on their roles in the consolidation trend were included in the brokers' midyear results, released earlier this month.
John Reeve, executive chairman of Willis Corroon, said in a statement that a merger with Sedgwick would be difficult to achieve because "the two groups have pursued different strategies."
When Sedgwick reported its results, a statement from Chairman Sax Riley concurred. "Their strategy is quite decided," he said of Willis Corroon, and "they're not interested in consolidation."
Mr. Riley emphasized that while Sedgwick "would like to get bigger," its goal in any merger or acquisition remains foremost to deliver long-term shareholder value.
Sedgwick does not want to merely acquire minority stakes in other entities where it has no control over day-to-day operations or dividend policy, Mr. Riley said.
He added that this did not necessarily preclude a deal in which Sedgwick would have minority ownership, citing its recently announced plans for a joint venture covering southern Europe and Latin America with Gruppo Nikols of Italy, in which Sedgwick will have a 49% stake but voting control (BI, Aug. 11).
By contrast, Willis Corroon recently opted to acquire a one-third minority stake in French broker Gras Savoye S.A., which Willis Corroon will increase to a majority stake within 12 years (BI, July 28).
The results of the two brokerages also highlight their contrasting strategies, including their very different performances in the United States.
In the first six months of 1997, Sedgwick posted a pretax profit of 66.5 million pounds ($108.7 million), a 4% increase from pounds 64.1 million ($98.1 million) in the first half of 1996.
This was achieved after a strong U.S. performance, with Sedgwick's U.S. pretax profits rising 31.9% to 15.7 million pounds ($25.7 million) from 11.9 million pounds ($18.2 million).
Overall revenues for the broker were little changed at 465.4 million pounds ($760.9 million), compared with revenues of 467.3 million pounds ($715 million) in the first half of 1996.
Over the same six-month period, Willis Corroon saw its pretax profits slip by 12% to 60.2 million pounds ($98.4 million) from 70.6 million pounds ($108 million) in the year-earlier period.
Operating profits from North America were more than halved to 5.8 million pounds ($9.5 million) from 13.5 million pounds ($20.7 million).
Revenues declined 8% to 335.8 million pounds ($549 million) from 365.2 million pounds ($558.8 million).
Willis blamed "continuing acute pressures," particularly in North America, and the strength of the British pound.
Mr. Reeve indicated that improvement should arise out of Willis Corroon's strategic objective of reaching leadership positions in chosen market sectors.
He cited as examples of this objective two Willis Corroon investments-its Gras Savoye investment and the increase to 100% of its stake in York Willis Corroon Corretores de Seguros S.A., Brazil's third-largest broker.
Mr. Reeve said that other strategic developments which should help Willis Corroon's performance include the acquisition of new teams and producers in a number of its U.S. operations, the continuing restructuring of U.K. retail business and a recently announced joint Independent Financial Advisory with British bank Abbey National P.L.C.