MMC Acquires Cambridge P&C - Analyst Blog


Striding on an acquisition spree, Marsh & McLennan Cos Inc. 's ( MMC ) Marsh & McLennan Agency LLC (MMA) announced the acquisition of Michigan-basedCambridge Property & Casualty (P&C) for an undisclosed terms and financial consideration.

Apparently, markets remained indifferent of the event, as the stock price of Marsh & McLennan dipped marginally by 0.4% to $47.22 on Dec 4. MMA is a subsidiary of Marsh & McLennan's leading insurance brokerage wing - Marsh Inc.

Armed with annual revenues of $6 million and a staff strength 41, Cambridge has been offering insurance and risk management services to the high net-worth individuals (HNIs) and to other mid-sized businesses since 1974.

Further, the acquisition will allow Cambridge to maintain its existing business model and work culture, while also add to its technical expertise and vast resources that were inaccessible to the firm until now. It will also complement the strategic benefit consulting services provided to mid-size organizations by McGraw Wentworth in Michigan, which was acquired by MMA in Jan 2013.

On the other hand, this deal will help Marsh & McLennan to expand its insurance brokering coverage by consolidating individual outperforming agencies across the upper Midwest. Cambridge also brings along superior clientele and excellent market expertise.

With the acquisition of Cambridge, Marsh has, to date, acquired about 33 firms since Nov 2009 within the insurance brokerage space. The latest acquisition is yet another attempt by Marsh & McLennan to maximize its manpower resources in order to expand its clientele.

The broad band of acquisitions over the past few years has strengthened Marsh & McLennan's position as one of the dominant players in its industry. Moreover, despite the acquisition-related costs, Marsh & McLennan has posted impressive results for the most of 2012 and 2013.

Overall, Marsh & McLennan's focus on boosting inorganic growth is well-aligned with delivering improved margins as well. Alongside, a healthy balance-sheet and adequate liquidity eliminates all significant risks from the company's financial leverage.

Marsh & McLennan currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance sector include Hilltop Holdings Inc. ( HTH ), Montpelier Re Holdings Ltd. ( MRH ) and CNA Financial Corp. ( CNA ). All these stocks sport a Zacks Rank #1 (Strong Buy).

CNA FINL CORP (CNA): Free Stock Analysis Report

HILLTOP HLDGS (HTH): Free Stock Analysis Report

MARSH &MCLENNAN (MMC): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CNA , HTH , MMC , MRH

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