November 8, 2018 by Greg Meckbach
A US$6-billion deal that could form the world’s largest commercial brokerage is one step closer to reality.
Britain’s Jardine Lloyd Thompson Group plc announced Wednesday that 99.9% of its shareholders voted in favour of having JLT acquired by Marsh & McLennan Companies Inc. Both firms have several commercial brokerage offices across Canada.
The merger is still subject to regulatory approval but the shareholder approval “is an important milestone,” Dan Glaser, president and CEO of New York City-based Marsh & McLennan, said in a release.
Marsh & McLennan owns commercial brokerage Marsh, as well as reinsurance broker Guy Carpenter, management consultancy Oliver Wyman, human resources advisor Mercer and Encon Group Inc., a Canadian managing general agent that offers professional liability and construction insurance.
London, England-based JLT was formed in 1997 when Jardine Insurance Brokers merged with Lloyd Thompson.
If the acquisition by Marsh & McLennan is approved, this would result in either “the biggest one or one of the biggest” commercial property and casualty brokerages in the world, Georges Pigeon, a Montreal-based partner with KPMG’s transaction services group, told Canadian Underwriter earlier.
The deal has been blessed by competition authorities in the United States, Marsh & McLennan announced Oct. 15. It still requires approval of British authorities, the company noted Nov. 7.
Aon plc leads the commercial non-life broking market with 10.5% market share, Finaccord Ltd. reported earlier. Marsh and JLT rank second and fifth respectively. Finaccord measures market share by commercial non-life broking revenue in 2015.
Put together, Marsh and JLT have 10.8% market share – 8.8% for Marsh and 2% for JLT.
Ranking third and fourth are Willis Towers Watson PLC and Arthur J. Gallagher & Co.
Not all merger and acquisition deals get approved. In early 2015, two Bermuda reinsurers – Axis Capital Holdings Ltd. and PartnerRe Ltd. – announced their boards voted unanimously in favour of a merger.
That agreement got scuttled when Italian investment firm EXOR – now PartnerRe’s corporate parent – made its hostile offer to buy PartnerRe. Had PartnerRe merged with Axis, the combined firm would have been a global Top 5 reinsurer.
Unlike the ill-fated Axis-PartnerRe merger, JLT’s shareholders have approved an acquisition by Marsh & McLennan.
Cross-border mergers and acquisitions are common in the insurance sector.
The Dominion of Canada General Insurance Company was acquired in 2013 by New York City-based The Travelers Companies Inc. Three years later, Switzerland-based ACE Ltd. acquired The Chubb Corporation of Warren, N.J. The combined firm is now called Chubb Ltd and based in Switzerland.
Toronto-based Fairfax Financial Holdings Ltd. acquired London-based Brit PLC in 2015 and Switzerland-based Allied World in 2017.