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Insurer in Full: Measuring the Dan Glaser legacy

If the success of a retiring elite sports coach is measured by silverware and competition victories, then for CEOs of multinational firms it was traditionally always about the share price performance. Or at least it used to be...

In today’s more touchy-feely world, other metrics have slipped in. Values, staff morale and corporate purpose have all climbed up the ladder in the past decade. How would a buccaneering CEO like General Electric’s “Neutron Jack” Welch – a man who trampled the competition with a ruthlessly simple strategy of sacking his weakest 10 percent every year – cope in today’s world where the “talent” insist on a “healthy” work/life balance and often regard office attendance as optional? With difficulty, one imagines…

Rivals would probably also add other success metrics. Strategic direction, understanding future customer trends and, of course, well-timed corporate M&A are all yardsticks that one’s peers and competitors would rank highly when judging someone’s leadership legacy.

 

Dan Glaser CV

 

It is a testament to Dan Glaser – the 62-year-old group president and CEO of Marsh McLennan who announced his year-end retirement yesterday – that he passes all of these grades with flying colours.

In December 2007, Glaser left AIG (where he led its global energy business and then Europe) and returned to Marsh, the firm where he had started his career in 1982. Only it was a very different organisation that he returned to. The New York-headquartered global broker had long regarded itself as the Ivy League equivalent of global insurance brokerages. It carried itself with the confidence and aura akin to Wall Street’s investment banks or magic circle law firms.

“The once proud firm appeared wounded, perhaps mortally. The share price had collapsed and predators were circling – not least its smaller rival Willis led by the flamboyant Joe Plumeri”

But this came crashing down with the then New York Attorney General Eliot Spitzer’s assault on the firm in October 2004, which resulted in a brutal cull of leadership (beginning with its patriarchal but aloof leader Jeff Greenberg), a mass of humiliating headlines and revelations over business practices, and a hugely expensive 2005 agreement that included Marsh spinning off its wholesale and banking-type businesses and a commitment to stop charging insurers for market services (a highly lucrative practice that Marsh at the time excelled in).

The once proud firm appeared wounded, perhaps mortally. The share price had collapsed and predators were circling – not least its smaller rival Willis led by the flamboyant Joe Plumeri.

Glaser – working initially with Brian Duperreault before succeeding him in January 2013 – was responsible then for the group’s remarkable turnaround from this nadir and returning the business to its more naturally assumed role as the industry’s largest global insurance intermediary 

In his 10-year tenure as president and CEO, investors enjoyed the spoils of a share price that climbed almost fivefold. Strategically acute, he recognised Marsh McLennan’s weakness in the US mid-market and built the $2.5bn revenue Marsh McLennan Agency from scratch. Glaser pushed hard to remind his colleagues that a brokers’ role was to be the clients’ advocate and a risk consultant rather than simply transactional sales. 

MMC-share-price-graph-since-Dan-Glaser-became-group-CEO

He foresaw the coming “war for talent” in specialty and struck decisively when hearing whispers of a changing attitude among the Keswick clan, who controlled the UK’s largest broker JLT. In the space of a mere 11 days in September 2018, he had agreed terms to buy the firm for £4.3bn – an audacious deal that also restored the group to the number one spot ahead of Aon when measured by insurance revenues.

But Glaser is also more than a deal-maker and a strategist. During his tenure, Glaser demonstrated a sure-footed ability to make the right calls on major issues of the day. As a consequence he has also emerged as one of the industry’s few global leaders with the natural authority and respect recognised by policymakers and regulators, as well as investors and clients.

For example, he navigated Marsh McLennan through the uncertainties of Covid-19, resisting the urge to take some of the drastic actions made by other firms – including Marsh’s long-standing rival Aon – to cut salaries. Indeed, he did the opposite – commiting no one would lose their job because of the pandemic.

Amid the uncertainty of the Aon-Willis Towers Watson merger, Marsh McLennan saw it as an opportunity to recruit talent (just as rivals did with JLT). In all, the group said it had boosted headcount by upwards of 5,000 staff in that time. 

“During his tenure, Glaser demonstrated a sure-footed ability to make the right calls on major issues of the day. As a consequence he has also emerged as one of the industry’s few global leaders with the natural authority and respect recognised by policymakers and regulators, as well as investors and clients”

Glaser’s tenure was also marked by taking a stand on key societal challenges, particularly those related to diversity, equity and inclusion.

Amid the social upheaval that spanned the globe following George Floyd’s killing in 2020, Marsh McLennan stepped up its efforts to promote diversity and inclusion by committing $30mn in funds to support such initiatives over a five-year time horizon.

Marsh McLennan was also among the first wave of firms to respond to the Supreme Court ruling overturning Roe v Wade, when it announced to staff it had expanded its health benefits to cover the cost of out-of-state travel for reproductive care.

The financial performance of the business continually improved. During the period from 2010 to mid-year 2022, Marsh McLennan has delivered a 6.0 percent GAAP revenue compound annual growth rate (CAGR), 1,070 basis points of operating margin expansion, a 12.9 percent adjusted EPS CAGR and 17.4 percent free cash flow CAGR. Including dividends, and over that period shareholders have been rewarded with a total return of 623 percent – more than twice the 278 percent of the S&P 500.

John Doyle

Finally, he has restored senior leadership stability to the group after the post-Spitzer traumas. True, this began with Duperreault who effectively rejoined the group at the same time. It was the Ace founder who earmarked Glaser as his successor by anointing him group president. In November 2021 Glaser did the same with his colleague John Doyle.

And yesterday, it was formally announced Doyle will take over in January 2023. In one sense, Glaser leaves big shoes to fill but he also leaves Marsh McLennan in a much better place than he found it. And arguably that is the best legacy of them all…

 

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