Companies involved in mergers and acquisitions (M&A) need to hold on to key staff, according to the chief executive officer (CEO) of Aon Securities.
Paul Schultz explained to Bermuda:Re+ILS that when two insurance companies are involved in M&A talks there is always a risk that a key underwriter might leave, taking their team or even their clients with them.
He believes that the re/insurance market is very much a relationship-based market and so trading relationships and partnerships that clients and re/insurers create are truly valuable.
“When clients hear of a potential merger involving one of their markets, the benefit of the doubt tends to favour the relationship and the length of that relationship,” said Schultz.
“Generally I think that clients are supporters of mergers; if a merger is to happen, their principal focus is that it will protect the trading relationship and that they are informed about the nature of the transaction, in order that they can plan their business strategy accordingly.”
Schultz added that the retention of key colleagues in any merger is a very important part of a successful transaction, allowing client relationships to be retained.
“What we saw with the Aon, Aon Re, Benfield merger, and what we saw with some of the reinsurance mergers we’ve seen recently, there was a large effort put forth in terms of communications with clients,” he said.
“When there’s a big merger happening people are cognisant that uncertainty is not a good outcome and so everybody is trying to communicate in a way that gives clients ongoing updates on what’s happening and also reassuring messages about relationships – in other words as much information as they can before the entities combine.”
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Aon Securities, Paul Schultz, Mergers & Acquisitions, Europe, Bermuda