‘Torturous’ talks between Marsh and HSBC continue

Marsh is understood to be in ongoing negotiations with HSBC Insurance Brokers over a possible takeover.

HSBC has informed some of the senior staff about the implications of the talks, but no formal decision had yet been made at the time of going to press. The talks were revealed by insurancetimes.co.uk last Friday. One source said that any negotiations were likely to be drawn out because of involvement from Marsh’s parent company in the USA.

Sources estimated that HSBC Insurance Brokers is worth between £150m and £200m.

The source said: “There’s nothing concrete but they [Marsh] believe it is entirely logical. The decision process is likely to be pretty torturous and pretty numerical. The ultimate decision lies in the US, and they might still want to put their money elsewhere.”

Acquisition-hungry Marsh had previously been linked to Oval, although no deal went ahead.

Marsh is keen to increase its footprint in the UK SME sector. HSBC Insurance Brokers’ book of business lies 70% in the UK and 30% worldwide, although chief executive Phillip Gregory is keen to increase its global portfolio. He is about to open an office in Vietnam and buy a majority stake in its Chinese company, called Beijing HSBC Insurance Brokers.

At present, no other contenders are in the race for HSBC Insurance Brokers. In August last year, Marsh was pipped at the post by Aon in the acquisition race for reinsurance broker Benfield in a deal worth $850m.

HSBC and Marsh have remained tight-lipped about the deal, but the bank’s eagerness to divest its broking arm could have been sparked by the decision to put its insurance business into run-off.

HSBC Insurance UK had a capital injection of £110m pumped into it before going into run-off in September.