Consolidation in the insurance sector continues with the news that the British brokers Sedgwick is to be taken over by the US group Marsh & McLennan. In Ireland the deal will make the combined Marsh & McLennan/ Sedgwick Dineen arguably the biggest brokers in the market.
Market share and turnover figures are closely guarded secrets but industry sources say that Aon, Marsh & McLennan and Coyle Hamilton are currently neck and neck on market share.
When the £1.25 billion sterling international merger deal is completed, Marsh & McLennan will extend its lead as the world's largest broker. The combined Marsh & McLennan/Sedgwick Group will have annual revenue of almost $5 billion, well ahead of its nearest rival, the Aon Group.
But the merger will raise control and dominance issues in the Irish market. The combined companies would have more than 50 per cent of the pensions market. Sedgwick owns Irish Pensions Trust, the largest company in the group pensions market, while Marsh & McLennan owns the number two player, Mercer.
Market rivals will be hoping that the merger will force the sale of one or other of the pension operations. There would be plenty of interested bidders. A number of other large brokers would be expected to be interested in acquiring a large block of lucrative pension business. Among the bigger brokers, Coyle Hamilton, Aon and Willis Coroon could be bidders, though both Coyle Hamilton and Aon already have significant pension operations. Fishers, Kevin Kelly's expansive financial services group which failed in its bid for Coyle Hamiliton some years ago, could be interested while other potential broker bidders could include the IFG group. There could be interest too from the bank assurers, Ark Life and Lifetime. But neither operation would come cheap. While it is very difficult to put a value on the brokerages, the management buyout at Coyle Hamilton a few years ago in leaner times valued that group at £15 million. The latest merger is another step in the consolidation of the broker sector into a small number of superleague players and a large number of small independent brokers.
