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Marsh & McLennan (MMC) Unit Buys Commodity Trading Firm

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The global management consulting arm of Marsh & McLennan Companies, Inc. (MMC - Free Report) , Oliver Wyman, recently inked a deal to purchase the commodity trading advisory firm, Veritas Total Solutions. The acquisition is expected to be finalized in the third quarter of 2024. The Veritas team members will be part of Oliver Wyman and will be based in a key center of the energy industry, Houston, TX.

The deep expertise that Veritas has in risk, systems, analytics and AI is expected to strengthen the capabilities of Oliver Wyman in offering comprehensive trading advisory and systems implementation services. This, in turn, may benefit commodity trading companies with exceptional trading optimization expertise.

The latest move seems to be a time opportune one as present commodity trading enterprises must utilize the latest insights and technologies to stay competitive, owing to the evolving market complexities.

Initiatives similar to the latest one highlight the efforts of Oliver Wyman, a part of Marsh & McLennan’s Consulting segment, to upgrade its services suite and presence across the globe. The entrepreneurial spirit, extensive knowledge of commodity markets and proven client impact of Veritas make it a valuable addition to Oliver Wyman.

An enhanced services portfolio is likely to fetch more clients to the MMC sub-unit and provide an opportunity for it to earn more revenues. This, in turn, is expected to contribute to the overall top line of MMC. Oliver Wyman accounted for around 12% of the company’s total revenues in the first quarter.

This sub-unit boasts specialized expertise in strategy, operations, risk management and organization transformation based on which it provides advisory services to a diversified client base belonging to automotive and manufacturing, communications, media & technology, energy and natural resources, financial services, insurance and asset management, health and life sciences, public sector, private capital, retail & consumer goods, and transportation services space.

Similar to the Oliver Wyman unit, the other three subsidiaries of Marsh & McLennan, Mercer, Marsh and Guy Carpenter, continue to pursue strategic acquisitions to expand product offerings and strengthen MMC’s global presence. The parent company spent $301 million on buyouts in the first quarter.

A few days before the latest move, the Mercer sub-unit entered into a deal to acquire Cardano, a long-term savings specialist operating mainly in the UK and the Netherlands, for upgrading the insurer’s offerings in the Wealth business. In June 2024, Marsh McLennan Agency (MMA), a division of Marsh, closed the buyout of Mississippi-based Fisher Brown Bottrell Insurance, Inc., as a means to solidify the presence of MMA in Mississippi, Alabama and Florida.

Shares of Marsh & McLennan have gained 16.8% in the past year compared with the industry’s 8.6% 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 The Allstate Corporation (ALL - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and NMI Holdings, Inc. (NMIH - Free Report) . While Allstate sport a Zacks Rank #1 (Strong Buy), Brown & Brown and NMI carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Allstate outpaced earnings estimates in three of the last four quarters and missed the mark once, the average surprise being 41.88%. The Zacks Consensus Estimate for ALL’s 2024 earnings is pegged at $15.13 per share, which indicates a nearly 16-fold increase from the prior-year figure. The consensus mark for revenues implies a year-over-year improvement of 9.4%. The consensus mark for Allstate’s earnings has moved 2% north in the past 30 days.  

Brown & Brown’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.90%. The Zacks Consensus Estimate for BRO’s 2024 earnings implies 28.5% year-over-year growth while the same for revenues indicates an improvement of 9.1%. The consensus mark for Brown & Brown’s earnings has moved 4.3% north in the past 60 days.  

The bottom line of NMI outpaced earnings estimates in each of the last four quarters, the average surprise being 8.60%. The Zacks Consensus Estimate for NMIH’s 2024 earnings and revenues indicates a rise of 10.7% and 11.1%, respectively, from the prior-year reported figures. The consensus mark for NMI’s earnings has moved 1.4% north in the past 30 days.

Shares of Allstate, Brown & Brown and NMI have gained 43.7%, 39% and 28.2%, respectively, over the past year.

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