Marsh & McLennan's Inorganic & Organic Initiatives Pay Off

Global insurance broker Marsh & McLennan Cos. Inc. (NYSE:MMC) has consistently been performing since 2009. In each of the last six years (2009–2015), its consolidated underlying revenue has grown in the range of 3% to 5%. Since 2009, its adjusted earnings per share have grown at a CAGR of 13.5%, consistent with its long-term target set at Investor Day in 2010 and reaffirmed in Mar 2014.

This has been made possible by Marsh & McLennan’s continued investments in organic and inorganic growth, reflected by nearly $7 billion invested in growth and efficiency during 2009–2015. This includes 115 acquisitions and investments totaling approximately $4.6 billion, and capital investments of $2.2 billion. During the first half of 2016, the company used $168 million for acquisitions and closed the buyout of New York-based insurance brokerage and human resource consulting firm Corporate Consulting Services Ltd, a leading aviation risk advisor Aviation Solutions LLC and one of Florida’s largest independent agencies Celedinas Insurance Group. Acquisitions have added 2% on average to the company's earnings from 2009 to 2015.

On the organic investment front, the build-out of its Mercer Marketplace Healthcare exchange is another developing success story.

Marsh & McLennan is also investing in technological innovation. For example, Marsh acquired Dovetail, a technology provider with an advanced cloud-based platform that enables agents to trade with multiple insurers and bind policies in real time. Guy Carpenter recently launched GC ReBid, a proprietary real-time, online reinsurance auction platform on which markets can openly bid for participation on reinsurance placements.

Similarly, Mercer has launched an array of digital and mobile solutions that include: Mercer Match, a mobile application that utilizes gamification and neuroscience to match individuals with job opportunities; Mercer Harmonise, a UK mobile application that enables individuals to track critical information on their wealth and health in a single place; and Mercer Pension Risk Exchange, an online platform that allows pension plan sponsors to monitor buy-out capacity and execute transactions swiftly. In a similar vein, Oliver Wyman,a unit of Marsh and a leading global management consulting has launched “OW Labs,” which applies advanced algorithms to large data sets to deliver insights to clients through customized dashboard applications.

Currently, Marsh & McLennan carries a Zacks Rank #3 (Hold). Some better-ranked players are NMI Holdings, Inc. (NASDAQ:NMIH) , National Interstate Corporation (NASDAQ:NATL) and Allied World Assurance Company Holdings, (NYSE:AWH) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>