A division of Marsh & McLennan Companies, Inc.’s MMC Marsh business, Marsh McLennan Agency (“MMA”), purchased the Texas-based SOLV Risk Solutions for an undisclosed amount. MMA delivers business insurance, employee health and benefits, retirement and wealth management, and private client insurance solutions to individuals and mid-market organizations.
The buyout seems to be a prudent one since SOLV is reputed for extending enhanced risk management advisory services to businesses, family offices and private equity firms throughout the United States. The acquiree adopts a systematic approach to gain an in-depth understanding of clients’ businesses and offers a detailed study of their risk profile.
Thus, with the expertise of SOLV, MMA will be able to boost client service and data-driven insights thereby leading to the devising of advanced risk management strategies. This, in turn, is likely to equip MMA to cater more effectively to its client base.
MMA remains quite active on the acquisition front that it hadstarted back in 2009. Since then, MMA has purchased over 100 agencies. Clark Insurance, CS Insurance Strategies, Steinberg & Associates, McDonald-Zaring Insurance were some of the organizations that had been acquired by MMA last year.
Such an active buyout strategy has boosted the capabilities of MMA, which in turn, is likely to boost commissions received in return for the company’s services. The sound performance of MMA usually adds strength to the performance of the Marsh sub-unit.
Marsh and Guy Carpenter form part of the segment that usually contributes the most to the overall revenues of Marsh & McLennan - Risk and Insurance Services. The segment accounted for 65.6% of MMC's total revenues in the first quarter of 2023.
Acquisitions are one of the core growth strategies of Marsh & McLennan, which has helped it to expand product offerings, benefit customers and strengthen its global presence. Pursuing buyouts within its different operating units has enabled MMC to delve into new geographies, expand within the existing locations, explore new businesses and specialize within its current businesses. After expending $572 million on acquisitions in 2022, MMC remains quite active on the buyback front so far this year. It spent $263 million on buyouts in the first quarter of 2023.
Another recent buyout of MMC has been undertaken by the Guy Carpenter unit of Marsh. It has agreed to acquire an Israeli independent reinsurance broker, Re Solutions. This acquisition is expected to solidify Marsh & McLennan’s presence across Israel.
Shares of Marsh & McLennan have gained 5.4% year to date compared with the industry’s 1.7% growth. MMC currently carries a Zacks Rank #3 (Hold).
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Stocks to Consider
Some better-ranked stocks in the insurance space are American International Group, Inc. AIG, Brown & Brown, Inc. BRO and Ryan Specialty Holdings, Inc. RYAN. While American International sports a Zacks Rank #1 (Strong Buy), Brown & Brown, and Ryan Specialty carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International’s earnings surpassed estimates in three of the trailing four quarters and missed the mark once, the average surprise being 9.22%. The Zacks Consensus Estimate for AIG’s 2023 earnings suggests 44.6% year-over-year growth, while the same for revenues indicates an improvement of 8.5%. The consensus mark for AIG’s 2023 earnings has moved north by 6.8% in the past 30 days.
The bottom line of Brown & Brown outpaced earnings estimates in three of the last four quarters and missed the mark once, the average surprise being 1.19%. The Zacks Consensus Estimate for BRO’s 2023 earnings and revenues suggests a rise of 10.5% and 13.2%, respectively, from the prior-year reported figures. The consensus mark for BRO’s 2023 earnings has moved 2.4% north in the past 60 days.
Ryan Specialty’s earnings surpassed estimates in two of the trailing four quarters, missed the mark once and matched the same in the remaining one occasion, the average surprise being 2.67%. The Zacks Consensus Estimate for RYAN’s 2023 earnings suggests 15.7% year-over-year growth, while the same for revenues indicates an improvement of 17%. The consensus mark for RYAN’s 2023 earnings has moved 2.3% north in the past 30 days.
Shares of Brown & Brown and Ryan Specialty have gained 10.7% and 0.5%, respectively, year to date. However, the American International stock has declined 12.9% in the same time frame.
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