Key Takeaways
- • Marsh & McLennan Companies (MMC) sealed a £4.3 billion takeover of UK insurance broker Jardine Lloyd Thompson (JLT) in mid-September 2018, with the backing of the JLT board.
- • MMC expects to cut 2%-5% of the combined group's 75,000 workforce, potentially eliminating as many as 3,750 jobs across finance, HR, IT, legal and administrative functions.
- • A potential merger of Mercer's UK business (£384.3 million revenue in 2017) with JLT Benefit Solutions (£121.3 million) would create a pensions consultancy with combined turnover of £505.6 million, ahead of Willis Towers Watson's £408 million.
- • Senior management of JLT will receive pay-outs of about £100 million, and JLT Group CEO Dominic Burke will join MMC as Vice-Chairman.
- • The deal arrives while the UK Competition and Markets Authority continues its investment consulting market investigation.
Summary
Marsh & McLennan Companies (MMC) has completed a £4.3 billion takeover of UK insurance broker Jardine Lloyd Thompson (JLT), a transaction announced in mid-September 2018 and backed by the JLT board. According to the report, the acquisition will net senior management pay-outs of £100 million, while the combined workforce faces uncertainty. MMC is expected to cut 2%-5% of the combined group's 75,000 staff (MMC has around 65,000 employees and JLT about 10,000), which could mean as many as 3,750 job losses. MMC said the redundancies would come from a "broad range" of units including finance, HR, IT services, legal and administrative support.
The transaction could also reshape the UK actuarial and pensions consulting market. The ten largest firms in this segment generated combined revenue of almost £2 billion last year. Willis Towers Watson, Mercer and Aon Hewitt remain the largest nationwide actuarial and pension consultancies, with Willis Towers Watson previously leading at £408 million in annual revenue. Mercer, MMC's consulting arm and the second-largest by revenue, could merge with JLT's employee benefits business. Based on 2017 year-end accounts, Mercer's UK business reported revenues of £384.3 million and JLT Benefit Solutions reported turnover of £121.3 million, implying a combined £505.6 million that would make the merged entity the largest UK pension consulting business by turnover.
MMC said it would retain JLT's existing commitments to its defined benefit schemes, including planned deficit recovery contributions and contractually required contributions. JLT Group Chief Executive Dominic Burke will join MMC as Vice-Chairman and serve on its executive committee. Burke said he was "enormously proud of what JLT has achieved," while MMC President and CEO Dan Glaser cited the "complementary fit" between the companies. MMC has a market capitalisation of about £31 billion.
The deal also coincides with the UK Competition and Markets Authority's ongoing investigation into investment consulting. The CMA has already ruled out an industry-wide overhaul of the sector, and in its provisional decision published in July the watchdog said the market was not "highly concentrated."
The transaction could also reshape the UK actuarial and pensions consulting market. The ten largest firms in this segment generated combined revenue of almost £2 billion last year. Willis Towers Watson, Mercer and Aon Hewitt remain the largest nationwide actuarial and pension consultancies, with Willis Towers Watson previously leading at £408 million in annual revenue. Mercer, MMC's consulting arm and the second-largest by revenue, could merge with JLT's employee benefits business. Based on 2017 year-end accounts, Mercer's UK business reported revenues of £384.3 million and JLT Benefit Solutions reported turnover of £121.3 million, implying a combined £505.6 million that would make the merged entity the largest UK pension consulting business by turnover.
MMC said it would retain JLT's existing commitments to its defined benefit schemes, including planned deficit recovery contributions and contractually required contributions. JLT Group Chief Executive Dominic Burke will join MMC as Vice-Chairman and serve on its executive committee. Burke said he was "enormously proud of what JLT has achieved," while MMC President and CEO Dan Glaser cited the "complementary fit" between the companies. MMC has a market capitalisation of about £31 billion.
The deal also coincides with the UK Competition and Markets Authority's ongoing investigation into investment consulting. The CMA has already ruled out an industry-wide overhaul of the sector, and in its provisional decision published in July the watchdog said the market was not "highly concentrated."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.