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Marsh & McLennan (MMC) Unit Buys Clark to Better Serve Clients

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Marsh & McLennan Companies, Inc.’s (MMC - Free Report) Marsh McLennan Agency (MMA), the unit within MMC’s business that is the leading insurance broker and risk advisor – Marsh, recently purchased the Maine-based Clark Insurance for an undisclosed amount.

Shares of Marsh & McLennan lost 1.8% on Jun 3, replicating declines in broader markets.

Concurrent with acquiring Clark Insurance, Haberman Insurance, the Massachusetts-based full-service agency that had been purchased by Clark Insurance last year, is also part of the recently inked buyout deal.

The acquisition seems to be a prudent one since Clark Insurance is reputed for extending enhanced business insurance, employee health and benefits, and private client services to businesses and individuals across its areas of operations for more than nine decades. Thus, together with the expertise of Clark Insurance, MMA will be able to boost its capabilities and more effectively cater to clients, colleagues and the community.

With buyouts similar to the latest one, the sub-unit MMA is focused on bolstering its portfolio, which in turn, is likely to provide a boost to the Marsh unit’s performance in the days ahead. Through Marsh and Guy Carpenter, Marsh & McLennan carries on business across the segment that usually contributes the most to MMC’s revenues — Risk and Insurance Services.

With an intention to boost its capabilities and geographic footprint, the MMA sub-unit had resorted to purchasing market-leading independent agencies similar to Clark Insurance in the past as well. MMA’s acquisition of Texas-based InSource Insurance Group LLC or Pelnik Insurance based in North Carolina last year is evidence of the same.

Acquisitions are one of the core growth strategies in 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, foray into new businesses and specialize within its current businesses. MMC spent $1.1 billion on buyouts in 2021. On the acquisition front, the insurance broker has been quite active this year as well by expending $24 million on buyouts in the first quarter of 2022.

Shares of Marsh & McLennan have gained 14% in a year against the industry’s decline of 7.7%. MMC currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the insurance space include Arthur J. Gallagher & Co. (AJG - Free Report) , RLI Corp. (RLI - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) . While RLI sports a Zacks Rank #1 (Strong Buy), Arthur J. Gallagher and AXIS Capital carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arthur J. Gallagher’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.52%. The Zacks Consensus Estimate for AJG’s 2022 earnings suggests 42.2% year-over-year growth, while the same for revenues indicates an improvement of 5.3%. The consensus mark for Arthur J. Gallagher’s 2022 earnings has moved north by 15.4% in the past 60 days.

The bottom line of RLI outpaced earnings estimates in each of the last four quarters, the average surprise being 45.89%. The Zacks Consensus Estimate for RLI’s 2022 earnings suggests 12.4% year-over-year growth, while the same for revenues indicates an improvement of 16.7%. The consensus mark for RLI’s 2022 earnings indicates a 14.5% north in the past 30 days.  

AXIS Capital has a trailing four-quarter earnings surprise of 54.80%, on average. The Zacks Consensus Estimate for AXS’s 2022 earnings and revenues suggests a rise of 22.5% and 3.2%, respectively, from the prior-year reported figures. The consensus mark for AXIS Capital’s 2022 earnings has moved 1.5% north in the past 30 days.

Shares of Arthur J. Gallagher, RLI and AXIS Capital have gained 14.4%, 16.6%, and 11.9%, respectively, over a year.

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