Marsh reloads

Marsh's appointment of its new global chief has sent another strong signal to the UK market: the global brokers are coming.

the problem is, they still have a long way to go.

In the latest instalment of gamekeeper turned poacher Daniel Glaser, having abandoned his post as AIG's UK supremo, has followed Brendan McManus' exodus from Royal & Sun Alliance in May to take over at Willis UK.

It seems almost inevitable that Marsh will either start buying brokers or look to match its rivals in developing an MGA proposition. Quite possibly, it could do both.

The question of whether the global brokers have the expertise beyond that of their respective new bosses, however, remains to be seen.

Though it is too early to say what Glaser's appointment means for Marsh the omens, so far, don’t look good.

When his predecessor, Brian Storms, was unceremoniously axed in September, the company's stock plummeted six percent in less than 24 hours. Since Glaser's appointment, it has risen by less than half that figure – although it is showing the potential to climb further.

But it would take a brave man to bet on Marsh.

Despite it being over three years since their implementation, the $850m wake of the Spitzer reforms continues to bite, with the company failing to meet analysts' forecasts over the last two quarters - a situation compounded by the fact that bitter rival Aon reported it had almost doubled its profits in Q3.

Despite the boost of Glaser's appointment Standard & Poor, having already placed parent company MMC on credit watch last month, this week lowered its counterparty credit rating from BBB to BBB-, and its short-term rating of the company from A-3 to A-2.

Credit analyst at S&P Steven Ader said the reason for the adjustment followed the "unsuccessful implementation of [cost-saving] initiatives that, in addition to generating a substantial increase in operating expenses, posed a material distraction to servicing and selling to clients."

MMC president Michael Cherkasky has said that the move to suspend these initiatives will deliver $125m in savings next year without impacting on revenue.

At the same time, a memo sent to Marsh senior brass said that the company's UK business would be "transforming" in an attempt to boost its margins to 20% by 2010.

It is unclear as to how this is to be achieved, but presumably the words "consolidator" and "MGA" will play their part, as well as "restructuring" - a process which is already underway.

In the meantime a 2.5% hike on its commission and fee business has attempted to set it along that road.

Where it will ultimately lead few can guess, but one of them, Marsh hopes, is Glaser.