Aon Benfield CEO says we have reached the “end of the journey” for reinsurance broker consolidation. But he predicts more reinsurer mergers.

Andrew Appel, chief executive officer of Aon Benfield, said the industry had “reached the end of the journey for reinsurance broker consolidations. I’m not sure that there are many natural combinations left,” he said, speaking to journalists in London on 17 April.

Rival broker Guy Carpenter recently announced a deal to buy Collins, the world's seventh largest reinsurance broker. From 1 April reinsurance broker Carvill withdrew from placing any new business. Appel’s company is currently digesting its $1.5bn merger with Benfield, which gives Aon Benfield the largest market share. Aon previously also bought Gallagher Re.

However, Appel did foresee more consolidation among reinsurers, especially Bermudians: “There is a natural opportunity for some combinations in Bermuda. For our five combinations would be good for the market,” he said. He sees a “once in a generation opportunity for players to emerge in the top ten", as reinsurers shift their positions. Appel denied that reinsurer consolidations are bad for clients by offering less choice. “Whether there are 60 reinsurers or 50 reinsurers its still a very competitive market,” he said.

Of Aon's merger with Benfield, Appel said that “99% plus of our clients have been positive” about it. Clients were benefitting from the global scope of the advice, he argued.

Aon Benfield has already announced that over two years it will shed between 500 and 700 staff, from a total of about 4500. Appel said that the combined firm was not losing key personnel. “Of the top 150 leadership positions, easily more than 95% have stayed,” he said. However, he admitted that there could be more senior departures over the next year.

Appel acknowledged that there were cultural differences between the two firms. Benfield was known for an “open, collaborative” culture and was strong in marketing, whereas Aon’s culture was “more technically deep, academically oriented” and had probably “gotten less mileage out of its investments” compared with Benfield.

He denied that Aon had paid too much, at $1.5bn, for Benfield, because reinsurance rates had hardened since the deal, and reinsurance brokers’ share prices had performed well relative to the market.