HIM not part of HIBL sale to Marsh

Gavin Bradshaw 01/03/2010

The HSBC Group has refuted claims that HSBC Insurance Management (HIM) is on the brink of sale as part of the agreement to sell HSBC Insurance Brokers Limited (HIBL) to Marsh.

Keith Jones, head of Insurance for Bank of Bermuda, which oversees the captive management operation, also denied claims that HIM is likely to be sold due to a lack of new captive business.

“HSBC Insurance Management is still a large operation and the business is doing very well,” he said. “New business growth in 2009 was excellent.”

Jones added that new business targets were achieved in Bermuda and Cayman and record new business was produced in the US and Guernsey.

Additionally, he said that the HIM client base has in fact grown in the past 12 months and that there had been seven new staff hires within HIM already in 2010.

Jones said that four redundancies have been announced at HIM Bermuda in 2009 but that they all related to one large life insurance client that went into run-off.

Under the terms of the agreement between Marsh and HSBC the two companies have entered into a preferred strategic partnership, giving Marsh preferred access to provide insurance broking and risk management services to HSBC’s corporate and private clients.

However, Jones said that while there had been a common industry perception following the HIBL acquisition that the captive management business would be part of the sale, there was no truth in this rumour.

In addition, he said, less than 3% of HIM’s client base had been generated by HIBL. “In reality the broker business has only produced one or two clients in the past two years. The majority of our business is produced outside of the group.”

Jones said further that the linkage between HIBL and HIM was “virtually zero in all locations except Guernsey” arguing that HIM was widely recognised as an independent management firm. “Therefore, brokerage business has no control over HIM clients,” he said.

Marsh Captive Solutions has been rumoured as a potential buyer of the HSBC captive management operation. Michael Cormier, CEO of Marsh Global Captive Solutions, said that while the company was interested in continuing to grow its captive business, “it would be inappropriate to comment on any asset bases that might be on our horizon”.

“It’s fair to say that since the announcement of the HIBL sale to Marsh there have been a lot of approaches [to buy HIM] but all have been unsolicited,” added Bank of Bermuda’s Jones, arguing that HIM’s market reputation made it “an attractive business proposition”.