A $1.23 billion (£760 million) merger between US insurance brokers Aon and Alexander & Alexander may lead to further rationalisation in the Irish insurance broking market. Aon has a 75 per cent stake in Irish brokers McDonagh Boland. Alexander & Alexander has an Irish subsidiary, Alexander & Alexander Ireland, which recently acquired brokers Clinton Curtis and Melling. A & A Ireland would make no comment last night, while a spokesman from McDonagh Boland could not be contacted.

Under the merger arrangements, Alexander & Alexander shareholders will receive $17.50 per ordinary share, valuing these shares at $790 million. In addition, Aon will pay $317.5 million for A & A's preferred B shares which are held by subsidiaries of the American International Group and $120 million for A & A's preferred A shares.