There was immediate speculation that the huge takeover deal would be quickly followed by a significant corporate move by Royal & Sun Alliance, which banking sources say is seeking a pounds 1.5 billion loan to use either for a share buyback or an acquisition.
Royal & Sun Alliance shares were up by 27p to 558p on the speculation. CGU were up by 25p at 1,010p, and GRE up 12p at 290p.
Marsh & McLennan, the American insurance broking giant, is offering cash of 225p per Sedgwick share, a 58 per cent premium on the closing price on Monday. Marsh & McLennan has already received undertakings for 41 per cent of Sedgwick's share capital.
The deal follows just a month after Sedgwick's main British rival, Willis Corroon, sold out to a consortium of five insurers and Kohlberg Kravis Roberts, the New York investment company.
The buyout will mean no insurance broker of global reach will remain in British hands.
One leading industry figure said: "I think this is enormously sad. Having invented insurance 350 years ago, having seen so much innovation, nous and skills among insurance brokers, it's very regrettable that decisions will now be taken in New York or Dallas or Chicago.
"We have become the victims of a lack of global vision and the industry will be worse off as a result."
Sax Riley, chairman of Sedgwick, yesterday insisted the deal would benefit global clients, who now have the choice of just three global brokers. He said: "Historically you could say it is a sad day. I could ask the same question of the investment banking world. We set our stall out as a global player and to go forward we needed a partner."
Sedgwick sought the deal after years of trying to forge an alliance with Willis Corroon - an offer rebuffed by John Reeve, head of Willis Corroon.
Marsh & McLennan, the biggest broker in the world, already owns some of the biggest brokers operating the UK such as William M. Mercer. It took over a big US rival, Johnson Higgins, 18 months ago. Its nearest rival, Aon, bought its US rival Alexander and Alexander in mid-1997. Its UK operations, Alexander Clay and Godwins, merged towards the end of last year.
The companies confirmed there would be substantial job losses where roles overlapped, but sought to reassure staff they were secure.
It is estimated around 1,000 jobs are likely to go, saving Marsh & McLennan about $150m.