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Boston-based broker William Gallagher Associates has jumped on the social media bandwagon with the launch of a new industry blog.
“This is another way that we bring information to our clients in a timely fashion,” Philip J. Edmundson, WGA's chairman, CEO and contributing blogger, said in a statement. “Challenging economic times require not just news, but analysis. WGAInsureBlog goes deeper into timely issues in a way that will bring additional value to our clients.”
WGAInsureBlog, which you can access here, contains news and commentary on the latest insurance, risk management and employee benefits topics of the day.
As I reported yesterday, Aon Corp. has extended the employment contract of its president and CEO Greg Case through April 2015.
No changes were made to Mr. Case's current annual base salary of $1.5 million, according to the 52-page filing with the Securities and Exchange Commission. However, the target bonus he is eligible to receive increased to 200% of his base salary from 150%, with the maximum increasing to 300% from 250% of his base salary.
While Aon may have increased Mr. Case's bonus opportunity, it has “significantly reduced” his severance payout should he be terminated in connection with a change in control of the brokerage.
The move is not surprising given the controversies surrounding executive compensation today especially within the financial services industry (just look at our front page story this week on AIG). Not only have new SEC rules been proposed for pay disclosures, but government and shareholder pressure also is causing many companies to re-evaluate how they compensate their executives.
In Mr. Case's case, Aon will no longer provide a “gross-up payment” to cover the excise taxes on any “change in control” payments made to him. It instead will cap his cash and non-equity award payments to the “safe harbor” amount under the Internal Revenue Code such that the payments are not deemed to be “excess parachute payments.” The safe harbor amount is the maximum amount an executive can receive without being subject to the excise tax.
According to SEC documents, to the extent any of Mr. Case's severance payments are subject to the excise tax, Aon will either eliminate all non-equity award payments or reduce the payments to an amount not subject to the tax. If none of the non-equity award payments is nonqualified deferred compensation, then other rules for the reduction apply.
As it stands now, if Mr. Case were terminated as a result of a change in control at Aon, his severance package would include: his remaining base salary for the year; a bonus equal to the average bonus received in the three prior years; any accrued vacation pay; and a lump sum equal to three times the sum of his highest annual base salary and of his target annual bonus for the fiscal year in which the termination date occurs.
The payments, of course, hinge on whether Mr. Case signs a two-year noncompete agreement prohibiting him from working with another firm that generates at least 55% of its revenues from insurance brokerage, reinsurance brokerage or employee benefits brokerage services.
Business Insurance today revealed its 2009 Readers Choice Awards recognizing the best overall commercial insurance industry companies in 18 different categories, including retail, reinsurance and wholesale brokers.
Thousands of BI and BusinessInsurance.com readers cast their votes through confidential electronic ballots, choosing who they believe offers the best combination of service, value, quality and innovation.
You can find profiles of all the winners here, but I thought I'd give—as the kids like to say—a “shout out” to the winners in the various broker categories.
It's taken more than a year but Marsh & McLennan Agency L.L.C. has finally begun to announce some deals.
Although the news today that it has acquired Insurance Alliance, a $15 million revenue agency based in Houston, is a bit anti-climactic given all the speculation over the past year, it is one of several acquisitions Marsh & McLennan Agency will make before the end of the year as it builds out a national platform.
“We've got more than one announcement to make before the end of the year,” David Eslick, chairman and CEO of the agency, told me. “We will be announcing more hubs before the end of the year.”
As part of Marsh & McLennan Agency's “hub and spoke” strategy, it plans to acquire regional platform or “hub” agencies first before it begins to fold in other “spoke” agencies within a particular region. Mr. Eslick said that in order to launch a new region, a hub agency must have at least $10 million in revenue.
Insurance Alliance will serve as the hub for Marsh & McLennan Agency's Southwest operations.
If the Marsh agency were to make just two more “hub” acquisitions of comparable size before the end of the year, it would end 2009 with $45 million in revenue--enough to almost place it within the Top 50 largest brokers of U.S. business, according to Business Insurance's most recent rankings.
“Going into 2010, on a stand-alone basis, we will be a very sizable operation,” Mr. Eslick told me. He also said that we can expect the agency to make even more acquisition announcements in 2010.
So is the merger and acquisition activity within the brokerage marketplace finally picking up?
From what I am told the answer is “yes.” After a lackluster year of deal making in 2009 as a result of the global financial crisis and disconnect in pricing between buyers and sellers, activity is predicted to pick up in 2010.
Not only are buyers and sellers adjusting their pricing expectations, but the continuing soft market is putting pressure on publicly held and private equity owned brokers to start buying revenues again, I'm told.
There are a lot of firms in the $20 million to $100 million space that will ultimately be consolidated, one person noted.
With that said, word on the street is that Aon Corp. is close to announcing a deal to buy Jericho, N.Y.-based broker Allied North America, the 27th largest broker of U.S. business with $88.1 million in brokerage revenues in 2008.
In its biggest fundraising effort to date, the Council of Insurance Agents and Brokers raised more than $147,000 at its recent Insurance Leadership Forum to help fund scholarships for financially needy students interested in careers in risk management and insurance.
Rather than relying on live and silent auctions to raise money for its FAME Scholarship Program as it has in years past, the CIAB relied solely on individual pledges at its closing night gala held at The Broadmoor in Colorado Springs last month.
The gamble paid off as the agent and broker community generously donated $147,285 toward the scholarship program, the largest single fundraising effort to date for the CIAB.
Combined with the $27,000 raised at the CIAB's Employee Benefit Leadership Forum held in May, FAME will be able to sponsor 20 scholarships for the 2010/2011 academic year, six more than the 2009/2010 school year, said Barbara S. Haugen, senior vp of the Washington-based CIAB.
“We had no idea it would be this successful,” said FAME Chairman Skip Counselman. “Truthfully, I thought we'd (raise) $100,000. I had no idea that we'd (raise) that much.”
Mr. Counselman, who also is chairman and CEO of Baltimore-based broker RCM&D Inc., said the silent and live auctions held at the ILF typically raise between $80,000 and $125,000.
While there may not have been any items to bid on at this year's fundraising event, there were some incentives for pledging. The individual pledging the highest amount, for example, won a luxury package valued at $20,000 donated by The Broadmoor--one week in a two-bedroom cottage complete with meals, spa treatments and golf.
That distinction went to John Prichard Jr., senior vp and manager of special accounts at Heffernan Insurance Brokers in Walnut Creek, Calif., who pledged $18,000 to the FAME Scholarship Program.
In addition, about a dozen other individuals who donated at least $5,000 were given one year's naming rights to a FAME scholarship.
Since 2006, the Foundation for Agency Management Excellence or FAME has funded 37 $5,000 scholarships to full-time, financially needy students majoring in risk management and insurance. The CIAB relies predominately on fundraising efforts at its leadership forums to fund the scholarships.
Mr. Counselman said FAME's goal is to fund 50 students—25 juniors and 25 seniors. Toward that end, FAME is seeking $125,000 contributions from the industry to fund scholarships in perpetuity.
Wells Fargo Insurance Services and Assurex Global have already stepped up to the plate and sponsored two permanent FAME scholarships.
The chief executive officers of the world's three largest insurance brokers were featured in an article on the Wall Street Journal's Web site yesterday about the ongoing soft insurance market.
“We have to face the fact that the market is soft and getting softer,” Brian Duperreault, Marsh & McLennan Cos. Inc. CEO, was quoted as saying.
Greg Case, Aon Corp.'s CEO, added that he doesn't expect to see “meaningful movement” in prices before the second half of 2010.
While the article goes on to discuss contingent commissions and the possibility of Marsh, Aon and Willis Group Holdings soon being able to add contingents to their depressed top line results, the most interesting comments were about American International Group Inc.
When asked about the complaints by some insurers that AIG has been holding the market back by lowering its rates in order to keep business, Willis CEO Joe Plumeri called the concerns “overblown.”
Mr. Duperreault added: “I don't think it is any secret that AIG has been reducing prices, but so have others. I think there is much more going on.”
Subscribers to the online Wall Street Journal can access the full article here.
I guess it's safe to say that Marsh is not going to be acquiring a large national agency to launch its small account initiative.
Brian Duperreault, president and CEO of Marsh & McLennan Cos. Inc., basically shot down that rumor today when he said that Marsh will soon be announcing several small agency acquisitions around the U.S. to finally launch its Marsh & McLennan Agency.
What took so long? Marsh announced the formation of the agency on Oct. 24, 2008, and hired veteran agency builder David Eslick to be its chairman in January.
Executives at Marsh have maintained that the year-long search is a reflection of the disciplined approach they are taking in trying to identify the right agencies in order to give the agency its best chance at success--something that has eluded Marsh in its past small account efforts.
While I'm sure Mr. Eslick has run in to several road blocks along the way that have lengthened out Marsh's acquisition selection process, Mr. Duperreault told me today that he was not one of them.
“That couldn't be further from the truth,” he said of rumors that he lacked interest in the small account space and in deploying large amounts of capital toward it.
“I love this strategy. I was one of the ones pushing for it. I think it's where we need to be as an organization. I think it's a great use of capital and I think strategically it's an imperative. We have to do this,” he said.
Stay tuned.
Business Insurance recently compiled its annual list of the 20 most productive agents and brokers, which will be published in a special broker supplement on November 30.
I'm not going to give away the entire list, but I will tell you that Westmont, Ill.-based employee benefits broker Mid American Group Inc. ranks as the most productive broker among the 152 firms that submitted questionnaires for BI's annual agent/broker directory. Mid American's 2008 brokerage revenue per employee figure was $367,892.
And while it might not be surprising that a small 12-person specialty niche broker like Mid American would have the highest revenue per employee figure, Alliant Insurance Services Inc., which ranks as the 11th largest broker of U.S. business with $333.2 million in 2008 brokerage revenues, is the third most productive broker, with $308,519 in revenue per employee.
How did the world's 10 largest brokers measure up, you ask? None are represented in the Top 20 ranking, but we did rank them in a separate chart based on their 2008 revenue per employee figures.
Chicago-based Wells Fargo Insurance Services Inc. comes in No. 1 among the world's top 10 biggest with $220,501 in revenue per employee, while Itasca, Ill.-based Arthur J. Gallagher & Co., which recently announced it was trimming its workforce by 4%, bottoms out the list with $163,368 in revenue per employee.
Awards: John Tanner, senior vp and division counsel at McGriff, Seibels & Williams, received the 2009 Robert I. Townsend Jr. Member of the Year Award from the Assn. of Corporate Counsel. Mr. Tanner was recognized for his contributions, commitment and dedication to the association.
Seen and heard: Willis Chairman and CEO Joe Plumeri told a group gathered at the Executives' Club in Chicago on Thursday that trust is central to economic recovery. He proposed four steps for business to re-establish that trust: create a contract with customers and address conflicts of interest in the way business is done; elevate risk awareness at the senior executive and board levels and embrace comprehensive enterprise risk management; voluntarily disclose the risks companies' face and their levels of insurance coverage; and do a better job of explaining to the American people the positive role of business in society and the economy.
Quotable: “When you're subjected to a year-long criminal trial, the expense as well as the stress of that is remarkable. So to suggest they've gotten off scot-free is really a gross overstatement”-- James M. Burns, a partner and chair of the antitrust group of Williams Mullen in Washington, referring to the acquittals this week of former Marsh executives Joe Peiser, Greg Doherty and Kathleen Drake in the second Marsh bid-rigging trial.
Rumor mill: Still no word yet from Marsh & McLennan Agency, which has been searching for the right platform agency(ies) to acquire so it can start generating revenues. Rumors are swirling as to whether Marsh will spend the big bucks to acquire a Top 10 U.S. firm—like USI Holdings Corp. maybe--or buy a few regional firms and then roll up smaller agencies around the country. David Eslick, the agency's chairman, has said that he expects to make the agency's first acquisition by the end of the year. I'm told that indeed it probably will be year-end before we hear anything.
Aon Corp. may be sponsoring the Manchester United soccer club and the Professional Squash Assn. World Tour tournament, but USI New England has just added the New England Patriots and the New England Revolution to its roster of professional sports teams to which it can claim “official insurance broker.”
Patriot.com reported yesterday that USI New England reached a partnership agreement with Kraft Sports Group, owners of the football and soccer franchises, to become the teams' official insurance broker.
Under the deal, USI New England not only will be writing all of the teams' property/casualty and employee benefits coverage, it also will be co-branding with the franchises in various community events and fundraising efforts, a USI spokeswoman said.
USI New England already is the official insurance broker of the Boston Red Sox and Boston Celtics.
