International broker Marsh is negotiating to buy the Australian operation of British broker Heath Lambert. Media reports out of Sydney this week suggest the negotiations – which have been going on for some time – have been helped along by Heath Lambert’s withdrawal from markets outside the UK and Europe.

Executives from the Australian offices of Heath Lambert and Marsh declined to return calls from Sunrise Exchange News, but we can report that initial reaction from local brokers and underwriters isn’t particularly positive. Heath Lambert operates some successful commercial facilities in the Australian market.

And while the departure of Heath Lambert from the local scene has been expected for some time, it further consolidates the dominant position of the top three or four brokers. Analysts say the buyout could be the perfect move for Marsh – which is the Government’s risk management adviser – because Heath Lambert is the reinsurance broker for the Government’s Comcover arm.

Heath Lambert’s relations with the Federal Government haven’t always been rosy. Last year the broker admitted receiving undisclosed – and apparently unnoticed – payments from major insurers through its London office in connection with the Comcover business. It’s understood that Heath Lambert’s UK offices paid about $2 million to the Government to settle the matter.

Heath Lambert’s Australian and Asian operations had net assets of just over $24 million in December 2002.