Carnegie-Brown plans to beat his competitors with selective acquisitions
Rivalry among the world's three largest brokers is well-documented. Aon, Willis and Marsh are forever jostling for position, trying to erode each other's power base.
At present Aon seems to be self-absorbed and inward looking as it tries to re-align itself and dispose of non-core activities. This has left Marsh and Willis, in the UK at least, an open field to do battle, and it seems they have chosen the regions rather than the City to draw swords.
Marsh UK chief executive Bruce Carnegie-Brown, one year into the job yesterday, has been surveying the market and knows his strategy. "Aon is failing to achieve bottomline profitability. Which is why I can see the disposal of non-core business is needed.
"With Willis it is obvious they are taking an aggressive stance in the market. Like Marsh, it is about scale and size. Willis is not in markets, either in the UK or globally, that we are. Willis' global revenues are the same as Marsh's revenues in Europe. The scale difference is huge and they need to up their scale.
"I don't think their strategy is much different from ours. We are looking to buy regional brokers, though we are more selective, as our footprint in the regions is far bigger than theirs. Rochester Kemp (the Manchester-based broker) fills in a piece of the jigsaw for us in the UK. But we are constantly looking at further acquisitions."
Though he would not exclude networks from his target list, they are not on his immediate hitlist. "There is a big gap between the small and medium-sized capacity brokers and I would rather see these operations roll out their strategy, build themselves up to a good size and be successful. Then we might take an interest."
Carnegie-Brown admits his first year has been "a steep learning curve" and regards himself, in a quintessentially English self-deprecating way, a "simpleton" in the field of insurance. He is selling himself short by a long way. The Oxford-educated banker had an impressive 18 years at JP Morgan and has inspired his staff since entering Marsh's glass-city in the shadow of Tower Bridge in June 2003.
"I think the advantage of coming from outside the industry was I could repeatedly ask the question why? Sometimes it's hard for those in the industry because certain things are accepted intuitively.
"I also had time to understand the business, because we were still at the end of a hard market. The dynamics for both the brokers and clients were good and I didn't have to deal with any burning platforms crashing around me, such as bad results," he said.
What distinguishes working at Marsh from the banking community is the "powerful toolkit" he has a chance to play with.
"Marsh has the luxury as the leading broker in most lines of business. No-one in the banking industry has as many leadership positions in their lines of business as Marsh has in the world of insurance."
Things, however, could change. Carnegie-Brown said the market was "softening" in certain areas, such as property, energy and aviation.
"It is less evident in the renewal line than the new business line. Insurers are competing quite hard to take accounts away from other people.
"A lot of new business is going slower this year, possibly because clients are getting a better deal on the renewal line. So they are not tempted to shop around. Insurers are prepared to be more competitive on the new business lines."
While the senior executives of the major insurers are sending a message to their underwriters to hold steadfast on rates, Carnegie-Brown's message to his brokers is clear and purely commercial.
"It is not an issue for the broker. We are aligned with the client. We do have a responsible attitude that what might be a short-term gain for the client, could end up as a long-term loss for the client - namely lack of capacity or insurer insolvency. We have a responsibility to the insurance market as a whole.
"I agree with the underwriters who believe we have not had a sufficient time to re-build reserves after a long, soft period. Having said that, Marsh is not in competition with say R&SA or any insurers; we are in competition with Aon and Willis. It must be our job to exploit areas in the market which will offer better terms or better prices."
Clients and competitors will see a marked change in the branding of Marsh under Carnegie-Brown. The word "insurance" is being actively replaced by the term "risk" and Marsh is now promoting itself to clients as an integrated service. Last week's launch of its new EL practice is one such development.
"We are branding ourselves around the word "risk". It is the beginning of a journey that many of our competitors have also taken. We are further along the journey than our competitors. It will become a more urgent issue if the market begins to soften.
"In a hard market, you spend most of your time trying to get the risk placed, but in the soft market the insurance part is easier.
More time has to be spent on the risk analysis," he said.
Overall, the broker's traditional obsession with renewals will shift to offering diagnosis of the risk.
"In general, the market has been too focused on gross written premiums, premiums that get transferred to the market. The focus should be on risk because the universe of risk is much bigger than that."