Retail and wholesale M&A to continue, predicts Nationwide E&S’s Clark

Consolidation will continue in both the retail and wholesale broker sectors, although it is unclear exactly how much more can actually be done in the latter market, according to Nationwide E&S president Tom Clark.

On the retail side, the headline deals have seen Marsh & McLennan Companies acquire JLT Group, while Aon is due to complete its long-rumoured acquisition of Willis Towers Watson next year.

More recently, this publication has reported that Aquiline-backed Relation Insurance Services has acquired Summers Thompson Lowry, while earlier this month Genstar-backed Worldwide Facilities continued its expansion with the purchase of Strategic Underwriting Solutions and Royal Oak Underwriters.

Ryan Specialty Group subsidiary RT Specialty’s expected acquisition of All Risks will bring together what are regarded as two of the top four wholesale brokers in the US, and comes hot on the heels of a wave of consolidation in the sector in recent years.

AmWINS acquired Partners Specialty in 2017, while US Risk was acquired by retail broker USI last year.

Elsewhere, Worldwide Facilities was acquired by Genstar which bought out Lovell Minnick last October.

Clark, speaking during a Burns & Wilcox-hosted webinar late last week, said he expects the consolidation will continue.

However, the executive said it was “remarkable” that the rate of consolidation in the wholesale market had not slowed down.

“I think [the wholesaler consolidation] will continue, although I just don’t know how much more is left to tell you the truth,” Clark said.

“The big have gotten pretty big, and I don’t know what they view as the needed market share or geographical penetration to say “we’re done”, or if those words would ever come out of their mouths,” he added.

From Nationwide E&S’s point of view, Clark conceded that companies such as his have little control over what happens in the wholesale broking sector, even if the consolidation does not ultimately help his business.

“Other than being curious… we know we can’t control that [consolidation],” Clark said.

He said the relationships that his company has with the wholesalers are viewed “as much more important than the consolidation that’s going on”.

The consolidation, Clark said, “is what it is”.

Clark said Nationwide E&S has been “very disciplined” on creating franchise value within certain geographies.

“As the big get bigger, what we see is all of those big partners will now have some level of national authority. It’s just inevitable, and we can’t really control that,” Clark said.

“We don’t try to influence one way or another. It’s the distribution plan finding its own level within the industry, and we just have to make sure we’re facing off to the best of our ability to make sure that it’s delivering the type of business we want and, more importantly, the partnerships that we want.”