Marsh has sold the bulk of third-party wholesaler GHC only two years after its creation
The UK general insurance broking industry is still striving to find its ideal shape amid the pressures and challenges it faces.
Today, Marsh agreed to sell the bulk of its Gibbs Hartley Cooper (GHC) third-party wholesale business to Lloyd’s broker RK Harrison. The business sold comprises four divisions: cargo, specie, North American property/casualty, and accident, health & contingency practices.
The news comes two years after Marsh revived the Gibbs Hartley Cooper name to house the third-party wholesale business it acquired as part of its purchase of HSBC Insurance Brokers.
GHC’s website says it commanded $350m (£216m) of premium. The sale to RK Harrison is likely put a big dent in this number – though Marsh is unlikely to disclose how much.
Clearly, something wasn’t working for Marsh. Perhaps the divisions in question were too small to have a competitive edge in the cut-throat London wholesale market, and so are better combined with another broker’s operations to help them thrive.
Or perhaps the third-party brokers were uncomfortable placing wholesale business with one of their biggest retail broking competitors and Marsh was not seeing the additional business it had hoped.
Even so, Marsh clearly derives value from having third-party wholesaling. It is keeping GHC alive and running – though in a diminished state.
Marsh Europe chief executive Martin South said this morning, along with announcing the sale, that “Marsh has been delighted with its purchase of HSBC Insurance Brokers”.
However, while these wholesale units only made up a small part of the HSBC Insurance Brokers acquisition, the question has to be asked whether Marsh got what it paid for.
The divisions sold are likely to find a comfortable home with RK Harrison. The company is a wholesale and reinsurance broker in the traditional Lloyd’s/London market mould. Also, HSBC’s professional indemnity team headed to RK Harrison in April 2010.
Elsewhere, the trend for brokers to control more of the distribution chain by buying and building underwriting agencies continues apace. Giles-owned agency Ink Underwriting has bought specialist solicitors’ professional indemnity agency Indemnity Risk Solutions, further boosting its PI business.
With brokers such as Cooper Gay Swett & Crawford on the hunt for MGAs, and companies like Gallagher, Towergate and Hyperion keen to boost their underwriting divisions, there is likely to be plenty more of this activity to come.
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