JOHNSON & HIGGINS BUYS STAKE IN MEXICO'S BROCKMAN Y SCHUH

JOHNSON & HIGGINS BUYS STAKE IN MEXICO'S BROCKMAN Y SCHUH

Johnson & Higgins, the international insurance brokerage based in New York, has acquired a 25 percent stake in Mexico's largest insurance brokerage, Brockman y Schuh.

The purchase for an undisclosed price is the first of what could be several deals by international brokerages to acquire ownership stakes in Mexican firms this year because of the proposed North American free-trade agreement, U.S. insurance sources said.The Mexican insurance market totaled $4.5 billion in premiums last year and could approach $50 billion in 10 years if the Nafta is passed, said Henry Parker, chairman of the American Insurance Association's international committee. "Under Nafta, the U.S. market share of that total could be 10 percent compared with virtually no involvement in the market now."

Carl Modecki, president of the National Association of Insurance Brokers, said several of its members are attempting to buy stakes in Mexican brokerages. They include Alexander & Alexander and Rollins Hudig Hall. Insurance brokers Marsh & McLennan Inc. and Sedgwick Inc. have held stakes in Mexican insurance firms for years.

"What a global broker wants to do is have one name on a door worldwide that can provide seamless service," Mr. Modecki said.

Johnson & Higgins and Brockman y Schuh of Mexico City have worked closely since 1975 on risk management and employee benefit consulting activities in Mexico. The two firms previously announced plans for Johnson & Higgins to acquire an ownership stake in Brockman y Schuh, but the deal had not been approved by the Mexican government until Oct. 27.

"Investing in Brockman y Schuh gives Johnson & Higgins a chance to participate in Mexico's phenomenal economic growth," said David A. Olsen, chairman and chief executive officer of Johnson & Higgins. "It also provides Brockman y Schuh with a basis for expanding its services capabilities in an era of rapidly increasing cross-border trade."

Ricardo Retteg, a partner and managing director with Brockman y Schuh, said, "We will be part of a global organization. It widens our scope rather than keeps it limited to Mexico."

The partnership between Johnson & Higgins and Brockman y Schuh is important

because more foreign companies will be operating in Mexico in the future, Mr. Retteg said. Brockman y Schuh sells most of the insurance it brokers for insurance companies to large and medium-sized businesses, he added.

The deal will allow Brockman y Schuh to offer global insurance programs developed with the assistance of Johnson & Higgins, Mr. Retteg said. Brockman y Schuh also plans to design a global insurance strategy for Mexican companies that are expanding to operate worldwide.

Brockman y Schuh's board of directors, which had consisted of its 12 Mexican partners, will be expanded to allow four Johnson & Higgins officials to become members. Johnson & Higgins will have the option of increasing its ownership stake in Brockman y Schuh to as much as 50 percent during the next nine years, Mr. Retteg said.

"Brokers are extremely important to insurance companies," said Mr. Parker, also an international insurance adviser with the Chubb Group of Insurance Cos., of Warren, N.J. "Brokers are our marketing pipeline to the insureds.