MARSH in France

1. MARSH in France Best in France Case Study May 2006 By: Mr. ARBONA, Mr. ARMAND, Mr. POUYET, Ms. SNANOUDJ and Mr. THIRY

2. MARSH S.A. • MARSH S.A. came in France in 1997 • Consulting in risk management and insurance • World sales 2004: $5 Mds • Marsh & McLennan Comp. for the first quarter in 2006: • Revenue : 3 025 M$ • Operating income : 398 M$ • Operating Margin : 18.4% (same quarter in 2005: 8.5%) • Marsh France sales 2004: 314 M€ • MMC revenue in 2004 reached 10 365 M$, which was far more than its competitors for insurance broking and consulting (Aon Corp : 6 902 M$, Willis Grp Holding Ltd : 2 205 M$)

3. Genealogy of MARSH S.A Bouly Carle SUEZ • Energie • Spatial FAUGÈRE & JUTHEAU CECAR 1997 CECAR & JUTHEAU SEDGWICKbelongs toMARSH 1999 MARSH S.A

4. Encountered Marsh top-managers • Roger MARTIN • Former Director of the damage branch and then Key Account Director at CECAR • Delegated Managing Director of MARSH France SA, in charge of large industries, relationship with the insurance market and business development in Latin America

5. Encountered Marsh top-managers • Stanislas CHAPRON • Former Delegated Director of the Specialized Risks Division at FAUGERE & JUTHEAU. He was then promoted Director of the Specialized Risks Division (1996) and member of the Board • Managing Director of MARSH, member of the Board and Chief Executive Officer of MARSH France SA, and Director of the Specialized Risks Division

6. Benefits • It was highly interesting to get the visions of both Mr. MARTIN and Mr. CHAPRON • Since they stem from the two different sides which now compose Marsh SA, their points of view are complementary. • It is also relevant to study their divergence of opinion on the same topic. • This is something we try to convey through this report.

7. Company products • Products in France: • Consulting • Risk management services • Insurance • Marsh France has its headquarter in Levallois- Peret (92) and offices in Lyon, Marseille, Orange, Toulouse, Bordeaux. This network enables the company to be close to the needs of the clients. • Marsh’s goal is being the market’s reference where they are operating.

8. Company's clients • Company's clients:

9. Company's clients CAC 40 on French private market: • Possibility to insure large groups like Renault, LVMH, EADS, Saint-Gobain, Michelin. • Whereas in Germany equities = consortium containing a bank, a insurance company  impossibility to assure BMW (“self-insurance”) • It’s very interesting to insure international French groups from France because the source country controls the rest of the network: • Average number of countries reached by an international contract: 40

10. Why it came to France • France was not especially a key target • Marsh’s client were getting global • Insurance and re-insurance companies too • Marsh HAD to become global • This operation was part of a global world movement among brokerage  only three groups can now respond to all the clients’ expectations • Marsh has chosen to be a global company. It is willing to have an understood and evaluative worldwide role.

11. Company values • US values were brought in • Mainly regarding methodology, rigor, ethics, compliance, transparency → due to scandals (Spizer in 2004 for Marsh) • Consequences: additional work (papers to sign) leading to: • Loss of tenders on the middle market segment • Growing interest for transparency from large corporations (corporate governments) • It was not a huge drop since corporate governance in France was already more and more similar to the US one • Discrepancy: more in term of size than in term of methods • Difference between a “family enterprise” and a group • Culture: introduction of the American necessity to foresee things (failures AND successes)

12. Constraints in France • Before coming to France, Marsh had anticipated a worldwide well-known constraint in France: law and the lack of social flexibility • It was the toughest one to handle • The strategy of Marsh in France cannot be similar to the one in the USA because of the unions, workcouncil, labor laws, work inspectors, 35h, holidays… • When a decision is taken at the top-level, the French branch (Marsh SA) is most often compelled to adjust it before applying it.

13. Adaptation to France • Organization: • No American people in the organization, except from the matrix chart. The same as in the rest of the world: respect for the local culture and markets. • Typical Marsh (USA) organization for financial reporting: auditors (Sarbanes-Oxley law), governance… • Delay for Marsh SA to get adapted to it • Customer management: • Imported from the USA by Marsh • Distortion remains between the countries because of the various portfolios (France: c. 90% = large companies / Europe: c. 30%)

14. Adaptation to France • Human Resources: • Imported by Marsh • In the first months: audit of the staff structure • Before: empirical management • After: management of internal mobility, ages pyramid, training opportunities, every manager told to build a business plan for staff management • Job Assignment: US policy = give favor to internal promotion to avoid leaving • “From paternalism to potentialism” • Consequence: for the first time, moving within the company was not regarded as a betrayal whereas a wish. • International Transfers: every year, criteria published titles promotion in the international top-management. Quota country by country. Goal: better use of the competences, be proactive, award the performance.

15. Adaptation to France • Motivation & Performance Appraisal: the variable part of the remuneration has been slightly increased (Merit earnings). • Communication Policies: necessary to be adjusted to the transparency standards required. E.g. : buy-out of Kroll (former economic intelligence agency).

16. Key Constraint Costs • Strongly linked to the key constraint in France: • Labor laws, social benefits, professional fees, 35h, holidays, holdings… • The holding faces these problems when it promotes a French manager!

17. Key Benefit Numbers • French managers: • Intelligent, gifted • Workaholics • Reactive, know how to turn failures situations into successes

18. Important remark • It would have been interesting to complete this study by interviewing French groups, which are the same size than Marsh, established abroad in order to distinguish the constraints due to the multicultural and those due to the size of the group.

19. We Thank • Manager 1: Stanislas CHAPRON, CEO of Marsh SA 54, quai Michelet, 92681 LEVALLOIS PERRET CEDEX Stanislas.chapron@marsh.com 01 41 34 50 00 • Manager 2: Roger MARTIN, Delegated Managing Director of Marsh SA 54, quai Michelet, 92681 LEVALLOIS PERRET CEDEX roger.martin@marsh.com 01 41 34 50 00 • Manager 3: David SNANOUDJ, broker at Marsh SA 54, quai Michelet, 92681 LEVALLOIS PERRET CEDEX david.snanoudj@marsh.com

20. Bibliography • www.marsh.com • www.marsh.fr • www.mmc.com

21. Our Team • Paul ARBONA 13, rue Maurice ROLLINAT 66000 PERPIGNAN • Maxime ARMAND 2, rue Casimir Perier44000 Nantes • Louis-René POUYET 5, rue de la garenne du chat "Les Vignottes" 19000 TULLE • Marie SNANOUDJ • 121, Bd de l’hopital • 75013 Paris • Yannick THIRY • 95, rue Bauret • 57240 Nilvange