MMC-JLT deal accelerates Guy Carpenter’s transition plans

Team integration, emerging risks and evolving market dynamics are giving David Priebe, chairman of Guy Carpenter, a lot to be optimistic about at this year’s Monte Carlo Rendez-Vous.

The recent acquisition of JLT by Marsh & McLennan Companies is enabling the reinsurance part of the business to move forward quicker with its wider transition plans as it positions itself for the future, said David Priebe, Chairman of Guy Carpenter.

Speaking to The Insurer against the backdrop of Hôtel Metropole in Monte Carlo, Priebe said that in spite of a lot of noise in the market, Guy Carpenter is “really pleased” with everything JLT has brought to the reinsurance business, particularly in the way it has “enhanced talent and enhanced capabilities”.

“For the past several years, Guy Carpenter has been looking to pivot our broking platform from being one of transactional excellence to being one that is also providing strategical advisory capabilities to our clients,” said Priebe, “focusing on a number of areas, including how we help them grow profitably, how to help them manage their capital more efficiently and access capital, and how they deal with volatility,” said Priebe.

With the JLT team coming on board, this process has now been accelerated, Priebe told The Insurer.

The Group has been “able to provide greater capabilities, while maintaining that transactional excellence [and the] integration of our teams, which we’ve been focusing on very diligently for the past six months - [that] has been really exciting and is really starting to take hold.”

Thanks to the acquisition of JLT, Guy Carpenter has been able to expand its offering to its core clients and Priebe is enthusiastic about the opportunities to grow in the market.

Discussing some of the “key initiatives” Guy Carpenter is focussing on, Priebe highlighted the work they’re doing on public sector risk.

Transferring risk from public balance sheets to private balance sheets is an area in which Guy Carpenter has been “making great strides”, he said. Having previously focussed on flood risk, the group are now turning their attention to wildfire risk.

Working to close the insurance gap is something Priebe sees as a “huge growth opportunity” when thinking about the future.

In addition to that, emerging risks also present some compelling opportunities for Priebe.

“We’re really focussed on the emerging risks, particularly cyber and other areas that technology and the shape of the global environment are changing. This is creating new risks, not only for Guy Carpenter, but the whole industry so there’s lots of growth opportunity there,” said Priebe.

As more companies start focussing on how to create a more efficient capital structure by transferring legacy liability to new balance sheets, Priebe sees a lot of potential here too.

“That’s really starting to take hold, so we’re focussed on growing our legacy liability practice, structured risk practice and that really was what drove the creation of the Guy Carpenter Capital Solutions,” he said.

Looking forward into 2020 and the market’s ability to hold the hardening rates that have driven some of the conversation in the run up to the Monte Carlo Reinsurance Rendez-Vous, Priebe expects there to be continued market improvement into next year.

“As we look to 2020 and where the market’s going, what we’ve seen is a firming in the market in a number of areas over the past three or four months and we think that’ll continue to transition in 2020.

“The good thing for the reinsurance industry is that this isn’t a reinsurance-led transition, this is a primary insurer-led transition, so the primary carriers are really the ones that are starting to improve the overall terms and conditions in the market,” he said.

“This has been driven by a number of companies getting back to basics, focusing on their core attributes, limiting gross line size and a lot of the risk is moving from the retail market into the E&S market.”