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Marsh & McLennan (MMC) Unit's Buyout Boosts Southeast Presence

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Marsh & McLennan Companies, Inc.’s (MMC - Free Report) Marsh McLennan Agency (“MMA”), a division of MMC’s Marsh business, recently closed the buyout of Mississippi-based Fisher Brown Bottrell Insurance, Inc. (FBBINSURANCE). An agreement to acquire FBBINSURANCE was inked by MMA with Trustmark National Bank in April and was completed within the targeted timeline of the second quarter of 2024.

Per the terms of the deal, Marsh McLennan Agency will pay a cash consideration of $315.9 million, subject to customary purchase price adjustments, for purchasing FBBINSURANCE. The employees of the acquired company will join MMA and continue operating from their current 10 locations.

FBBINSURANCE seems to be a prudent pick by MMA due to its longstanding reputation of being a specialized provider of commercial property and casualty insurance, surety and employee benefits services for businesses and individuals across the Southeast region. The acquiree has made its mark as one of the five largest bank-affiliated insurance agencies not only in Mississippi but also across the entire Southeast region.

The closing of the FBBINSURANCE acquisition is likely to serve as a means for Marsh McLennan Agency to solidify its foothold in Mississippi, Alabama and Florida. A solid regional presence, client-focused approach and an incredible leadership team will complement the unit’s endeavor. MMA will be empowered to devise enhanced risk management strategies for addressing the needs of businesses and individuals in the Southeast region.

Improved risk management strategies are likely to fetch more clients to MMA and subsequently, drive the performance of the Risk and Insurance Services segment. As part of this unit, risk management activities in the form of risk advice, risk transfer, and risk control and mitigation solutions are provided to businesses, public entities, insurance companies, associations, professional services organizations and private clients. The Risk and Insurance Services segment accounted for around 62% of Marsh & McLennan’s overall top line in the first quarter.

Marsh McLennan Agency pursued yet another acquisition recently. It purchased Texas-based Perkins Insurance Agencies in a bid to leverage its prowess in commercial and personal insurance solutions and strengthen MMC's footprint in the West Texas market.

The acquisition spree is not just restricted to the Marsh sub-unit of Marsh & McLennan. The different units operating under the Risk and Insurance Services, and Consulting segments of MMC resort to buyouts that enable them to expand product suite, enter new geographies, expand within the existing locations, foray into new businesses and specialize within current businesses.

After expending $976 million and $572 million on buyouts in 2023 and 2022, respectively, Marsh & McLennan seems to sustain its record of an active acquisition history so far this year as well. It spent $301 million on buyouts in the first quarter.  

Shares of Marsh & McLennan have gained 16.5% in the past year compared with the industry’s 11.5% growth. MMC currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the insurance space include Palomar Holdings, Inc. (PLMR - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Old Republic International Corporation (ORI - Free Report) . While Palomar currently sports a Zacks Rank #1 (Strong Buy), Brown & Brown and Old Republic carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Palomar’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.10%. The Zacks Consensus Estimate for PLMR’s 2024 earnings implies 25.8% year-over-year growth while the same for revenues indicates an improvement of 32%. The consensus mark for PLMR’s 2024 earnings has moved 3.3% north in the past seven days.

The bottom line of Brown & Brown outpaced earnings estimates in each of the last four quarters, the average surprise being 11.90%. The Zacks Consensus Estimate for BRO’s 2024 earnings and revenues indicates a rise of 28.5% and 9.1%, respectively, from the prior-year reported figures. The consensus mark for BRO's 2024 earnings has moved 2.8% north in the past 30 days.  

Old Republic’s earnings surpassed estimates in three of the trailing four quarters and missed the mark once, the average surprise being 6.61%. The Zacks Consensus Estimate for ORI’s 2024 earnings implies 3.8% year-over-year growth while the same for revenues indicates an improvement of 6.8%. The consensus mark for ORI’s 2024 earnings has moved 1.1% north in the past 60 days.

Shares of Palomar, Brown & Brown and Old Republic have gained 52.5%, 39.8% and 26.3%, respectively, in the past year.

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