Aon, Marsh and Willis tipped to increase their share of retail business

Oval Group chief executive Phillip Hodson told the forum that a merger between his business and rival consolidator Giles could prove a good fit.

The two companies have been heavily tipped to come together; last year Giles’ private equity backer Charterhouse attempted to orchestrate a deal that would have seen both businesses combined and rebranded under the Oval banner.

However, Hodson stopped short of confirming that a deal to create a broking giant was on the table.

Instead, he tipped giants Aon, Marsh and Willis to make major acquisitions to increase their share of retail business.

“The nationals have always looked at Oval for obvious reasons – we are very similar to them,” he said. “The challenge of Chris and

I coming together, a corporate business and an SME business … it could work. It’s all about people, it’s all about cultures.”

He added: “I do think what will happen is that the big players Marsh, Aon and Willis will come in and buy several quite large businesses in the UK. Those will be the dominant players.”

Giles chief executive Chris Giles said a transformational deal was the next step forward. “I would like it to be within the next 24 months.

I am impatient and I want to get on with things. I think they are out there to be had … we are thinking about it all the time.”

Both consolidators admitted that they made mistakes in the acquisition market last year.

Giles said that he regretted paying inflated prices. The consolidator acquired 21 brokers after it was handed a war chest worth hundreds of millions of pounds when Charterhouse bought 60% of the business in March.

However Giles said that he had no choice but to do the deals. “I regret buying the businesses and paying the prices we did,” he said. “You need to make mistakes to build the business. But someone had to do the deals.” He added that it was now a “great time to be consolidating your business”.

Hodson said he would have bought more niche businesses. “Arguably all the consolidators have bought businesses too quickly. We should buy three, four or five every year. That is what we will be looking to do.”

He said that Oval had another two niche MGAs in the pipeline, including a tie-up with Brit Insurance. “We are feeling our way. It gives us a competitive edge.”