Marsh & McLennan Companies, Inc.’s MMC subsidiary Marsh has entered into an agreement with leading specialty broker Construction Risk Partners (CRP), according to which the latter will repurchase the company’s stock from Jardine Lloyd Thompson plc or JLT Specialty USA. However, terms of the deal were not disclosed.
The pact is effective immediately wherein CRP will work as an independent construction risk and surety specialty insurance broker with its headquarters in Branchburg, NJ. JLT bought a 50.1% stake in CRP back in January 2017 to boost its scale, specialist construction ability as well as existence for JLT Specialty USA. This deal allowed CRP to provide JLT with a platform to expand its construction business.
In the second quarter of 2019, Marsh & McLennan spent a total of $5.8 billion on the pending acquisition of JLT with which it would be able to expand its capabilities going forward. The purchase is likely to strengthen the company’s initiative to emerge as a distinguished global firm in areas pertaining to risk, people and strategies.
Annual cost synergies of around $250 million are expected to be realized from this transaction over the next three years.
Acquisitions form one of the core growth strategies at Marsh and McLennan. The company has made numerous purchases within its different operating units that have enabled it to enter new geographies, expand within the existing ones, foray into new businesses, develop new segments and specialize within its prevalent operations. Its Marsh and Mercer business lines have been constantly acquiring units to enhance respective capabilities. The company has consistently solidified its portfolio through strategic takeovers and we believe that all these integrations bode well for growth.
Shares of this Zacks Rank #3 (Hold) company have rallied 17.2% in a year’s time, underperforming its industry’s growth of 26.1%.
Stocks to Consider
Investors interested in the insurance industry might take a look at some better-ranked stocks like eHealth, Inc. EHTH, Brown & Brown., Inc. BRO and Radian Group RDN.
eHealth offers private online health insurance exchange services in the United States and China. It came up with average three-quarter positive surprise of 167.2%. The stock sports a Zacks Rank #1 (Strong Buy).
Brown & Brown deals with insurance products and services. The company has a Zacks Rank #2 (Buy) and managed to deliver positive results in the trailing four quarters, the average being 9.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Radian Group engages in the mortgage and real estate services business in the United States. The company pulled off a positive surprise of 14.29% in the last reported quarter. It carries a Zacks Rank of 2.
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