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CHICAGOlAon Corp.'s promotion of Ted T. Devine to chief executive officer of Aon Re Global marks the ascension of another former McKinsey & Co. consultant to the brokerage's top ranks, and observers say the infusion of management consulting talent will likely benefit Aon.
Before joining Aon in 2005 as chief operating officer of Aon Risk Services Americas and head of global strategy, Mr. Devine led McKinsey & Co.'s North American insurance practice and North American insurance operations and technology efforts.
Other McKinsey alumni now at Aon include President and CEO Gregory C. Case, who was head of McKinsey's financial services practice when he joined Aon in 2005.
In addition, both Andrew M. Appel, who is CEO of Aon Consulting Worldwide, and Baljit Dail, Aon's global chief information officer, previously worked at McKinsey.
Mr. Devine replaces Michael D. O'Halleran as Aon Re Global's CEO.
Mr. O'Halleran, formerly Aon Re Global's chairman and CEO, has been named executive chairman.
In his new position, Mr. O'Halleran will focus on working with clients.
"We have committed to be a client-centered firm, and we're committing me as the most senior executive to be 100% focused on clients," said Mr. O'Halleran.
Mr. Case said Mr. Devine's background as "kind of the ultimate insurance insider," along with his focus on organic growth since working at Aon, will be a "very powerful combination."
Ramani Ayer, chairman and CEO of Hartford Financial Services Group Inc., said Mr. Devine "is a very smart executive, and in his various roles in life he has actually gotten to know CEOs and company managements quite well, and will be capable of really positioning Aon Re to continue to serve" its customers.
Observers say the executives' McKinsey background will benefit Aon.
John L. Ward, CEO of Cincinnati-based Cincinnatus Partners L.L.C., an advisory firm specializing in insurance, said: "McKinsey is a world-class consulting firm, and they bring innovation to the table. They also bring deep experience at building relationships with (chief financial officers) and CEOs of major companies, and those relationships, and their experience in building those relationships, should benefit Aon in a big way going forward."
"There's definitely a correlation" between Aon and McKinsey's businesses, both of which deal with people, relationships and enhancing products' value, said Gretchen Roetzer, an associate director at Fitch Ratings in Chicago.
Bruce Ballentine, vp and senior credit officer at Moody's Investors Service in New York, said the lack of direct experience working as an employee of an insurer or brokerage is not a problem for McKinsey alumni.
"I think they have gained ample experience with the insurance business and perhaps some helpful perspective from their role consulting to various insurance-related operations," Mr. Ballentine said.
Cliff Gallant, an analyst with Keefe, Bruyette & Woods Inc. in New York, said the McKinsey influence has proved valuable thus far. "If you remember where Aon was a couple of years ago, it was lagging its peers in terms of its margins, and the growth wasn't going anywhere," with Aon having many noncore businesses.
It might have taken outsiders "to sort of assess where the company was missing the mark," he said. "They've done a pretty good job, I think, of identifying weak parts of the company and boosting the margins and financially putting the company in a pretty good position," said Mr. Gallant.
"The challenge might be, once the margins are up and things are going smoothly, do they know how to win clients and gain business. And when you get down to that, having people with real brokerage experience might be more useful."
Meanwhile, Aon last week named Geoffrey Bromley as head of Aon Re's U.K., European, Middle Eastern, African and Asia Pacific operations.
Mr. Bromley formerly was chairman of European and Asian operations for reinsurance intermediary Guy Carpenter & Co. L.L.C. in London. He assumes his new position, which has not been filled at Aon for several years, in February 2008.