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

Martin South

2021 brokerage revenue: $19.86B
Percent increase: 15%

Marsh & McLennan Cos. Inc. delivered double-digit organic revenue growth last year on the back of continued strong insurance pricing, while it also capitalized on disruption in the broking sector to ramp up hiring.

Executive leadership changes were announced in November as John Doyle, formerly head of Marsh LLC, was named group president and chief operating officer of Marsh McLennan. Martin South and Dean Kilsura were named heads of its core insurance and reinsurance brokerage units, respectively. 

The addition of 6,000 employees in 2021 represented the highest level of hiring in Marsh McLennan’s 150-year history, Dan Glaser, president and CEO, said during its fourth-quarter earnings call with analysts.

In a year in which two of the brokerage’s biggest competitors were in the final stages of a planned merger that ultimately failed, Marsh McLennan was well-positioned to hire staff, said Mr. South, president and CEO of Marsh.

In the run-up to Aon PLC’s proposed purchase of Willis Towers Watson PLC, rival brokerages made numerous announcements about hiring staff away from the two companies. 

“Inevitably we were going to do what we could to hire the best talent,” Mr. South said. “We were able to make some investments and speak to people who I don’t think would have returned our phone calls, or would have been less eager to move over, but for a lot of disruption in the marketplace.” 

Marsh focused on high-growth areas, such as health care and senior living, and from a geographic standpoint it wanted to ensure it was in the best position to capture opportunities arising from the huge movement of talent and business to Florida, Mr. South said.

The brokerage also continued to “double down” on its strategy of early career hiring and its commitment to developing talent from within, he said.

Marsh McLennan also continued to grow through acquisitions in 2021 as its middle-market unit, Marsh & McLennan Agency LLC, completed eight deals, and its consulting business Oliver Wyman completed one acquisition for a total purchase consideration of about $1.4 billion, according to SEC filings. 

MMA’s acquisitions included Missoula, Montana-based PayneWest Insurance Inc., which, with $135 million in annual brokerage revenue, was previously the 33rd largest brokerage of U.S. business.

MMA, which launched in 2009, has grown to $2 billion in revenue and 150 offices in the U.S., Mr. South said. 

Marsh McLennan reported $19.86 billion in brokerage revenue in 2021, a 15% increase over 2020, and retained its No. 1 position in Business Insurance’s ranking of the world’s largest brokerages.

Revenue momentum continued in the first quarter of 2022. Marsh McLennan’s risk and insurance services business, which comprises Marsh and Guy Carpenter & Co. LLC, reported a 10.1% increase in revenue over the prior-year period, up 11% on an organic basis.

In a first-quarter earnings call with analysts, Mr. Glaser said there were greater risks and uncertainties than when the company entered the year. The Russia/Ukraine conflict added to the unsettled economic outlook and, like other brokerages, Marsh McLennan decided to exit its business in Russia in March.

Marsh McLennan had a strong first quarter, said Mark Dwelle, director, insurance equity research, at RBC Capital Markets LLC in Richmond, Virginia. “Our expectation is that we’ll see organic growth rates fall from the low double digits that we saw throughout much of 2021 to an average in the mid- to high single digits this year,” Mr. Dwelle said.

Some impact of last year’s hiring surge was seen in Marsh McLennan’s reinsurance business Guy Carpenter in the first quarter, but the greater effect should come in future quarters and boost revenue, said Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York.

As to a possible future CEO succession, the last time somebody occupied the COO position at Marsh McLennan it was Mr. Glaser before he replaced Brian Duperreault as CEO, Ms. Greenspan noted.

“To us it seems like it’ll be a seamless transition. Our expectation would be that transpires around the end of this year,” she said. 

Marsh McLennan had no comment on the issue.



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