Expanding its operations in Canada, last week
Marsh & McLennan Companies Inc.
) leading Consulting wing - Mercer - announced its intention to
purchase the pension wind-up operations of PricewaterhouseCoopers
(PwC) in Canada. While the deal is expected to culminate by the
end of Sep 2013, the terms remain undisclosed.
Administered by the Financial Services Commission of Ontario
(FSCO), pension wind-up occurs when an employer files for
bankruptcy its defined benefit or contribution pension plans or
voluntarily decides to wind up the same. However, any kind of
winding up of pension plans require an administrator.
Currently, the FSCO regulates about 8,350 employment pension
plans, comprising over 40% of all registered pension plans in
Canada. This offers ample long-term growth scope for Mercer in
Canada. The deal will not only enhance Mercer's client base but
will also augment the professional team expertise.
Following the acquisition, the operations of PwC will be
merged within Mercer's pension wind-up business in Canada. The
deal also complements Marsh & McLennan's strategy of
expansion into potentially strong markets through mergers and
Despitethe acquisition-related costs, Marsh & McLennan
posted impressive results in first half of 2013 based on modest
growth at Marsh, Guy Carpenter and Mercer; coupled with lower
expenses that drove the top line and operating margin. Even the
unutilized $1.0 billion revolving credit facility shall provide
cushion to the company's liquidity, thereby eliminating any
significant risk from the company's financial leverage.
Overall, as a leading global broker, Marsh & McLennan has
a history of outperforming its peers banking on its size, diverse
product offering, global presence and technical skill. We believe
that the company has the ability to remain focused on this growth
approach with a prudent management, thereby driving the earnings
in the future as well.
While Marsh & McLennan carries a Zacks #3 Rank (Hold),
other potential performers in the financial services industry
HCI Group Inc.
State Auto Financial Corp.
Global Indemnity Plc
). All these stocks carry a Zacks Rank #1 (Strong Buy).
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
HCI GROUP INC (HCI): Free Stock Analysis
MARSH &MCLENNAN (MMC): Free Stock Analysis
STATE AUTO FINL (STFC): Free Stock Analysis
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