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Marsh expects more Australian strength from JLT acquisition

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Marsh & McLennan has identified growth in Australia as a key benefit from its $US5.6 billion ($7.7 billion) acquisition of rival global broker JLT.

But early statements from Marsh President and CEO Dan Glaser suggests Australian staff should expect headcount reductions in the local market as the two organisations are merged.

Mr Glaser says the deal to acquire London-based JLT will make the group stronger in the UK and Australia and add to Marsh’s position in growth regions such as Asia and Latin America.

“Australia is a ‘top six’ country for Marsh and McLennan,” he told a conference call. “JLT is quite large and significant there too, so I love the idea of how that combines.”

As reported in a Breaking News bulletin on Tuesday, JLT CEO Dominic Burke will become Marsh & McLennan’s vice-chairman and serve as a member of the executive committee after completion of the deal in the next few months.

The acquisition is forecast to deliver cost savings of  $US250 million ($345 million) within three years, mainly from headcount reductions and rationalisations in areas such as real estate, IT and outside services.

The group flagged a 2-5% cut from a combined workforce of about 75,000, but Mr Glaser says “natural attrition” will play a role.

Reductions are expected across all geographic regions and from categories including finance, human resources, IT, operations, legal and administration.

Mr Glaser says JLT will make Marsh stronger in specialty risk broking and add to its expertise in such areas as aerospace, energy and construction.

“Our acquisition of JLT represents a meaningful step forward in our efforts to expand in higher growth and higher margin segments,” he said.

JLT’s risk and insurance operations in Australia and New Zealand made a £36.1 million ($65.5 million) net profit last year, up from £34.1 million ($61.8 million) in 2016, group accounts showed. Revenue from the employee benefits business grew 9% to £30.1 million ($54.6 million).

Mr Glaser says JLT “punches above its weight”, with a highly motivated workforce and a strong client focus.

“We have been admiring them from afar and when we saw an opening we decided to move swiftly,” he said.

JLT shareholders will receive £19.15 ($34.73) cash per share under the deal.

Mr Burke says Marsh & McLennan has always been one of JLT’s most respected competitors.

“I believe that, combined, we will create a group that will truly stand as a beacon for our industry,” he said.