BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Top insurance brokers, No. 1: Marsh & McLennan Cos. Inc.

John Doyle

2020 brokerage revenue: $17.27B

Percent increase (decrease): 3.8%

Marsh & McLennan Cos. Inc. continued to focus on mergers and acquisitions that expanded its middle-market business in 2020, and the COVID-19 pandemic did not curb its appetite for the deals. 

The New York-based brokerage’s middle-market unit, Marsh & McLennan Agency LLC, completed seven deals last year for a total purchase consideration of about $877 million, according to SEC filings. 

After a quiet start to 2021, on April 1 MMA moved to acquire Missoula, Montana-based PayneWest Insurance Inc., an independent agency with $135 million in annual brokerage revenue and previously the 33rd largest brokerage of U.S. business.

A year earlier, MMA had bought Assurance Holdings Inc., previously the 35th largest brokerage of U.S. business, based in Schaumburg, Illinois. 

“We’ll continue to invest inorganically where it makes sense. We’ve got a good pipeline, and the pipeline isn’t just at MMA. We’ve got a good pipeline outside MMA as well,” said John Doyle, president and CEO of Marsh LLC, the company’s main brokerage unit. 

There may be less opportunity to do large M&A deals now, especially given regulatory scrutiny of the Aon-Willis deal and previously of Marsh McLennan’s 2019 acquisition of Jardine Lloyd Thompson Group PLC, analysts say.

One of the lessons from the Aon-Willis merger is authorities appear to be wary of additional large brokerage M&As, said Mark Dwelle, director, insurance equity research, at RBC Capital Markets LLC in Richmond, Virginia. Aon PLC and Willis Towers Watson PLC agreed to sell various businesses to allay antitrust concerns, but the U.S. Department of Justice last month sued the brokerages seeking to block the merger. 

“Marsh itself was forced to divest a few things when it closed (its purchase of) Jardine Lloyd Thompson. Accordingly, that makes Marsh’s strategy of doing fold-in deals and relatively small-sized deals far more important. They aren’t going to attract the same scrutiny or create the same market concentrations,” Mr. Dwelle said. 

Despite the economic headwinds of the COVID-19 pandemic, Marsh McLennan’s 2020 brokerage revenue increased by 3.8% to $17.27 billion, retaining its lead as the longtime largest broker in the Business Insurance ranking.  

Marsh McLennan reported 1% organic growth in 2020, which accelerated to 6% in the first quarter of this year. The company’s top executives also said full-year 2021 organic revenue growth could potentially top its 3% to 5% guidance, as the economy turns the corner and growth accelerates. 

The first quarter set the stage for 2021, with results reflecting the improving economy combined with the still-sharp property/casualty pricing environment, said Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York. 

“On paper the economy continues to improve by the day,” and for the remainder of 2021, Marsh McLennan will benefit from much easier quarterly comparisons than it had in the first quarter, Ms. Greenspan said. 

Marsh had “good growth” in most geographies and specialty areas in the first quarter, including in cyber, construction and its private equity practice, Mr. Doyle said. “Last year there was an enormous amount of stress in economies all over the world and that impacted our revenue growth. … In some parts of the world, most notably here in the U.S., we have started to see a snapback in the economy and that has helped us,” he said. 

The property/casualty insurance market remains challenging for clients, and some have chosen to retain more risk, “whether that’s attaching at a higher level, buying shorter limits, buying less discretionary cover,” Mr. Doyle said. “Client by client, we’re helping them navigate the more difficult market,” he said. 

Meanwhile, Marsh is also benefiting from some of the distraction caused by consolidation in the market. “We’re not distracted, we’re focused on opportunities and challenges the current economy is creating for our clients,” Mr. Doyle said. 

CEO Daniel Glaser said during its first-quarter earnings call with analysts that Marsh McLennan increased net headcount by 500 in the fourth quarter of 2020 and added another 100 staff in the first quarter, some of whom were from rivals Aon and Willis Towers Watson.

Earlier this year, Marsh McLennan ended its political contributions to lawmakers who objected to certifying the 2020 presidential election results, and those contributions have not been resumed.