Marsh & McLennan's (MMC) Unit Buyout To Enhance Offerings

Marsh & McLennan Companies, Inc.’s (NYSE:MMC) subsidiary Marsh & McLennan Agency LLC (“MMA”) has reached an agreement to buy Centurion, which is located at Plymouth Meeting, PA. However, terms of this deal — expected to close in the second quarter of 2019 — were not disclosed.

Since 2006, the to-be-acquired company has been offering retirement consulting, asset management, institutional pension consulting, employee group benefit consulting and benefit-plan advisory. It provides fiduciary services to customers with joint plan assets worth more than $16 billion as well as to above 400,000 participants.

On completion of the agreement, Centurion will be part of the Trion Group, a Marsh & McLennan agency. Centurion is a perfect fit for MMA as the acquirer will be able to gain traction from the to-be-acquired’s skilled and experienced retirement consulting services, investment and health experts. This, in turn, will enhance the company’s offerings to clients.

Notably, Centurion’s clients will benefit from MMA’s unique and enriched resources and solutions.

This is yet another strategic initiative by Marsh & McLennan to upgrade its portfolio and establish its presence in the United States. Several acquisitions made over the past many years, significant capital expenditures undertaken for growth, launch of products and services, improvement of digital capabilities and branching out into new businesses will further drive the company's growth.

Of late, the company completed its other acquisitions , such as Pavilion Financial Corporation, Summit Strategies Group, Otis-Magie Insurance Agency, Klein Agency and Insurance Associates, Houston-based Wortham Insurance plus Eustis Insurance & Benefits. The company also closed the pending buyout of JLT Specialty this month for $5.6 billion.

In 2018, it spent a total of nearly $1.04 billion on acquisitions. Notably, $120 million of the company’s total revenues and $2 million of its operating income are related to its accretive acquisitions.

Given the insurance industry’s all-time high available capital, there has been a spate of buyouts in this space of late. Recently, Brown & Brown, Inc. (NYSE:BRO) announced that Brown & Brown of South Carolina, Inc. has acquired Cossio Insurance Agency to boost its South Carolina operations. Moreover, Arthur J. Gallagher & Co. (NYSE:AJG) concluded the purchase of McLean Insurance Agency, Inc. to ramp up its portfolio and consolidate its footprint in Northern Virginia. RenaissanceRe Holdings Ltd. (NYSE:RNR) also received the pending regulatory approvals for the takeover of Tokio Marine Holdings, Inc.'s reinsurance platform comprising Tokio Millennium Re AG and Tokio Millennium Re (UK) Limited . With this transaction, the company will be able to penetrate into the reinsurance market further.

Shares of this Zacks Rank #3 (Hold) company have rallied 17.5% in a year’s time, underperforming its industry’s growth of 22%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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